LOOKING AHEAD

More Tax Reform in 2019?

After tax reform legislation was signed into law earlier this year, we said it was a good step in the right direction but would be a missed opportunity if further reforms were not enacted. Iowa needs to continue to speed up individual income tax rate reductions, review and eliminate some tax credits, and lower corporate income tax rates.

Senator Jack Whitver indicated there may be a technical bill in 2019 to clarify a few issues with this year’s tax law changes.

NEW TEAM MEMBER!

Victoria Sinclair Joins ITR Staff

ITR welcomes Victoria Sinclair as our new Government Relations Director. Victoria has bachelor’s degrees in public administration and political science from the University of Northern Iowa.

Before becoming part of the Iowans for Tax Relief team, Sinclair served as a district representative for the U.S. House of Representatives for Iowa’s Fourth Congressional District. Prior to this, she spent two years as Government Relations Director on behalf of the student body at the University of Northern Iowa.

ITR President Chris Ingstad said, “Victoria’s knowledge and experience will strengthen our presence at the Capitol and across Iowa. She will help ensure elected officials act in a responsible manner with taxpayer dollars. We need to help families and businesses not just stay in Iowa but empower them to grow and to thrive.”

TAX HISTORY QUIZ

What year did Iowa impose its first state income tax?(Answer located at bottom of this page)

Sinclair Joins Iowans for Tax Relief Staff

WEST DES MOINES, IA – Iowans for Tax Relief (ITR), Iowa’s leading taxpayer advocacy organization, today announced the addition of Victoria Sinclair to their staff in the role of Government Relations Director.

Sinclair has bachelor’s degrees in public administration and political science from the University of Northern Iowa.

Before becoming part of the Iowans for Tax Relief team, Sinclair served as a district representative for the U.S. House of Representatives for Iowa’s Fourth Congressional District. Prior to this, she spent two years as Government Relations Director on behalf of the student body at the University of Northern Iowa.

ITR President Chris Ingstad said, “Victoria’s knowledge and experience will strengthen our presence at the Capitol and across Iowa. She will help ensure elected officials act in a responsible manner with taxpayer dollars. We need to help families and businesses not just stay in Iowa but empower them to grow and to thrive.”

Iowans for Tax Relief works to limit total government spending and total taxes for the benefit of all Iowa taxpayers. ITR was established in 1978 and is one of the largest taxpayer protection organizations in the country.

Did you know that the state of Iowa received $8.5 billion from the federal government in 2017? Since 2009 Iowa has annually received, on average, $7.5 billion from Washington D.C, though the exact amount fluctuates from year to year.

Over half of the money flowing through state government is subject to the next federal spending crisis. Federal funding to Iowa is never free. Most of it comes with very specific strings attached requiring the state to commit additional funds and follow Uncle Sam’s rules.

Iowa Must Protect Itself from Washington’s Mismanagement

There is no sign that Washington will get its fiscal house in order anytime soon. The national debt is projected to grow to $30 trillion by 2027 and that doesn’t account for Social Security, Medicare, and Medicaid. It is estimated those programs alone have over $80 trillion in unfunded liabilities.Most programs supported by federal dollars in Iowa are worthwhile. But just as we develop risk assessments and contingency plans in so many other areas of our lives, state government needs to take stock of all federal funding and ensure that Iowa can remain financially independent from Washington. So what steps does Iowa need to take to ensure we aren’t reliant on the mercy of political outcomes in D.C.?

Itemize all federal funds received.

Measure the dollars and obligations.

Identify the end date.

Develop a contingency plan.

Iowa will always be impacted by decisions made by Congress, but the more Iowa becomes dependent upon the federal government, the more our state loses sovereignty. Taking a full inventory of federal funds will spotlight the impact of federal dollars, make clear where federal money is going and what regulations are being forced upon Iowa, and as a result, help us prepare for when Uncle Sam is no longer able to provide such generous support to our state.

A Semi-Related Fun Fact

According to History.com, the nickname Uncle Sam is linked to Samuel Wilson, a meat packer from Troy, New York, who supplied barrels of beef to the United States Army during the War of 1812. Wilson stamped the barrels with “U.S.” for United States, but soldiers began referring to the grub as “Uncle Sam’s.” The local newspaper picked up on the story and Uncle Sam eventually gained widespread acceptance as the nickname for the U.S. federal government.

The image of Uncle Sam used in this email was created by artist James Montgomery Flagg. During World War I, this image and the words “I Want You For The U.S. Army” was used as a recruiting poster. The image was first used on the cover of Leslie’s Weekly in July 1916 with the title “What Are You Doing for Preparedness?”

Would This Make You Smile?

Oral health surveys and dental utilization rates indicate that a large portion of Iowans does not sufficiently utilize dental care. Some develop severe dental conditions, preventable by routine care, and cannot access care in dental offices. They resort to seeking care from hospital emergency rooms (ERs), which are generally not equipped to provide comprehensive dental services. These patients are typically given an antibiotic and pain medication and leave the ER with the same underlying problem they walked in with.

Two visiting scholars from Tax Education Foundation suggest one regulatory reform to address these problems would be to license mid-level dental providers, also known as dental therapists. Dental therapists’ can assist dentists similarly to how nurse practitioners assist doctors—by performing common, low-level procedures so that dentists can focus more on complex cases. Increasing dental options and competition among providers will benefit all Iowans. For those currently underserved, dental therapists are an option enabling them to receive routine care. Read the complete study here.

Increased Value Should Not Be Punishment

The Des Moines Register is reporting that homeowners in Polk County will see a 10 percent increase in assessed home values. Commercial and multi-residential assessments are expected to increase as well. Economic growth and a strong market are driving the increase in property values.

Should local governments in Polk County receive an automatic 10 percent revenue increase simply because property valuations increased by 10 percent? No, they shouldn’t!

This problem impacts every Iowan, not just those living in Polk County. The growth of property taxes is a major concern for many Iowans.

What part of your family’s budget are you going to cut so you can afford your new property tax bill? We know property taxes keep getting more expensive. Since 2000 total property tax revenue across the state of Iowa has increased over 100%. Over that same time, the cost-of-living adjustment (COLA) provided to Social Security beneficiaries has only increased by 46%. This growing property tax burden is painful to families and retirees.

Many local governments have avoided hiking property tax rates. Instead, they have relied on increasing assessments to drive property tax revenue higher and higher. Iowa’s current property tax structure does contain some property tax protections in the form of a valuation rollback and a 3 percent statewide assessment limitation, but these protections have proved ineffective at keeping property tax bills in check.

Elected officials need to look at the total revenue collected, not just tax rates.

The Iowa legislature can help provide taxpayers with property tax relief by establishing a revenue limit on property tax growth that is tied to a benchmark like inflation plus population growth or the Social Security COLA. This limit would not interfere with the assessment process, but it would control the growth of property tax bills and ensure local governments have enough revenue to fund their priorities. If elected local government officials want to push past the revenue growth limit, they need to explain to their citizens why they are going to collect extra dollars and cast a vote to collect more tax dollars than the limit would allow.

Property taxes, as with any tax, must not be excessive; property owners should not be punished just for owning property.

Increasing Revenue Will Lead to Unlimited Ideas for Spending

The first quarter of Iowa’s fiscal year just came to a close, and the outlook for the rest of the year is promising.

Iowa’s Revenue Estimating Conference (REC), which develops the revenue forecasts the Governor and Legislature must use for budgeting purposes, projects that state revenue will grow 4.9% during the current fiscal year that ends on June 30, 2019. That growth is a result of federal tax cuts and Iowa’s strong economy. After all, tax collections can’t grow if employment, investment, and spending by the private sector aren’t increasing as well.

For the taxpayer, it is helpful that Governor Kim Reynolds signed the income tax reform bill passed by the legislature earlier this spring. Aside from beginning to cut personal and corporate tax rates next year, the new legislation will prevent our state budget from swallowing up tax savings generated by the federal Tax Cuts and Jobs Act.

Speaking of next year, Iowa cannot grow complacent, thinking we will become flush with cash. In fact, during the same meeting where the REC projected 4.9% growth for the current fiscal year, they also predicted growth of less than 2% the following year.

With election day looming in November, as well as a slew of legislative retirements, it is uncertain who will be representing Iowans in Des Moines. What is certain though, is that regardless of how much our revenue grows there will be almost unlimited ideas for new and increased spending.

Many promises are being made on the campaign trail across our state and none of those promises come without a price tag attached. That’s why it is critical to send legislators to the Capitol who will keep the taxpayer in mind before committing to new government spending. Election Day is just 19 days away. Do your homework and vote for candidates who will stand up to the noisy special interest groups wanting to spend more and more taxpayer dollars.

What Will Iowa’s Tax Reform Do?

Iowans for Tax Relief commissioned a study examining the impact on Iowa’s economy from recent state tax law changes. According to Beacon Hill Institute, when fully implemented, Iowa’s tax law changes will:

Full implementation of the tax bill provides an economic boost – it will create a total of 8,270 private sector jobs by 2024.

Once fully implemented, Iowa households will enjoy a real disposable income increase of $673 million.

When the corporate income tax rate cut is fully implemented, it will provide an increase to the return on investment and ignite a surge in capital investment, which would increase by $100 million in 2024.

According to the Tax Foundation, Iowa ranks as the 11th worst state for its overall business climate. Iowa needed to act in order to compete with other states for jobs and investment.

Property Tax Survey Results

Recently we asked for your opinion about property taxes. Over half of those who took the survey said they had a significant increase in their most recent property tax bill and believe the Iowa legislature should make property tax reform a priority.

“It’s silly to try to reduce property taxes by any means other than limiting what cities and counties and schools and county hospitals spend. There is way too much duplication of services between the layers of government, and until that is reduced, all taxes will be too high.”

“Property taxes are complicated. I’ve been paying them for years and I still have a hard time keeping a handle on all of the different variables that make up the overall expense. It is frustrating that the overall tax burden Iowans pay is not a bigger issue. The size of government always grows and seldom retracts.”

“It really is a shame that property taxes can eventually take away someone’s property if they are unable to pay. Property owners are pretty much renting the land they own.”

Just because the value of a property may be worth more, it doesn’t mean the owner actually has more money to pay for it. Too many local governments have ridden a big wave of increased assessments and claim they didn’t raise taxes because tax rate did not go up.

Instead of just rates, local governments need to look at the total revenue they collect. A reasonable growth limit on taxes collected tied to a benchmark like inflation and population growth or the Social Security cost of living adjustment would provide for funding the priorities of government. If elected local government officials want to push past the revenue growth limit, they need to explain to their citizens why they are going to collect extra dollars and cast a vote to collect more tax dollars than the limit would allow.

ITR Talks Property Taxes on WHO Radio

Tuesday morning, ITR President Chris Ingstad was on WHO Radio’s Need to Know with Jeff Angelo. Jeff and Chris discussed property taxes and what can be done to slow down rapidly increasing tax bills. Jeff said, “When I was looking at your chart yesterday that your organization put out, you said the property taxes have doubled over the past 18 years, and that was put in the chart as they have gone up 100%. I thought, what other area of taxation would taxes go up 100% and the voters wouldn’t be grabbing the torches and pitchforks?”

Chris responded, “Some tell us they never really own their house, they are only paying rent. In terms of property taxes, retirees will tell us they can’t keep up. But, it is not only retirees or people on a fixed income, middle-class America doesn’t just run into new money every year. When taxes go up, that money has to come from somewhere in a household budget.”

ITR Hosts Roundtable in Newton

Last week ITR hosted a roundtable luncheon in Newton. State Senate candidate Rep. Zach Nunn and House candidates Ann Howell and Brian Lohse listened as taxes, spending, and budget priorities were discussed by area taxpayers.

A small business owner in attendance said, “Because of tax reform I gave all my employees a raise and a bonus based on years of service. I am listening again and if the state says they are moving toward more tax relief, I am going to move with them. My employees are listening too and they know we are all moving in the same direction.”

Some other comments were:

“Taxpayers are not an endless source of money. Government needs to be held accountable and responsible to those who pay the bills.”

“We have to make Iowa more competitive. When small businesses succeed the Iowa economy is strong.”

“Lowering taxes makes Iowa more attractive and increases revenue.”

It is good to hear from Iowa taxpayers who share ITR’s vision of lower taxes, reduced spending, and fewer regulations.

“What I’ve worked 50 years to build up, they’re taking away from me. Pie in the sky assessments allow government to grow and prosper way beyond what property owners and other taxpayers can afford.”

These are comments a retired Iowa veteran recently sent to us and the data backs up his claim about affordability. Since 2000 total property tax revenue across the state of Iowa has increased over 100%. Over that same time, the cost-of-living adjustment (COLA) provided to Social Security beneficiaries has only increased by 46%. This growing property tax burden is painful to all Iowans and especially to our retirees.

Current taxpayer protections are ineffective at keeping property tax bills from increasing. Many local governments have kept property tax rates the same, but are receiving significant tax revenue increases simply because property valuations have increased. Soon, property taxes will become unaffordable. What can be done?

An effective property tax limitation could be based on a fixed percentage, population growth plus inflation, or the Social Security COLA. This would keep taxpayers from receiving large increases in their property tax bills solely because of higher assessments.

The Iowa legislature can help provide taxpayers with property tax relief by establishing a revenue limit on property tax growth. This would not interfere with the assessment process, but it would control the growth of property tax bills while ensuring local governments continue to have enough revenue to fund their priorities.

Property taxes must not be excessive and property owners should not be punished just for owning property.

Taxpayers Deserve Relief and Transparency!

“What I’ve worked 50 years to build up, they’re taking away from me. Pie in the sky assessments allow government to grow and prosper way beyond what property owners and other taxpayers can afford.” These are comments a retired Iowa veteran recently sent to us and the data backs up his claim about affordability.

What Could be Done?

Consider This:

Property tax revenue has grown at a much faster rate than inflation, population, and General Fund spending.

Current taxpayer protections are ineffective at limiting property tax bills from increasing.

Effective taxpayer protection would control the growth of property taxes and ensure sufficient revenue to fund the priorities of local governments.

All local revenue and fees should be reviewed for limitation. When only property tax revenue has been limited in other states, local governments have increased sales taxes, hotel/motel taxes, other local taxes, or increased fees to make up for revenue they consider lost.

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Property taxes, just as with any tax, should not be excessive. Property owners should not be punished for owning property and should not be subject to higher property tax bills just because of increased assessments. Many local taxing authorities collect more revenue each year without increasing property tax rates.

The Taxpayers Association of Central Iowa recently released their City and School Property Tax Report for communities in central Iowa. In the report, they remind taxpayers, “It’s important to focus on property tax revenue, not the property tax rate. Often, a property tax rate that is constant from year to year, or even over many years, is touted as an accomplishment on behalf of taxpayers. It is not necessarily the case. Property taxes are a function of the rate times the taxable value. In times when property valuations are growing, even a constant rate will generate an increase in taxes.”

We encourage you to look at the back of your property tax statement. Each taxing authority is listed along with the total tax and how that compares to the prior year. Understanding where your tax dollars go and communicating with elected officials is an effective way to keep them accountable.

Tax Reform Survey Results

Recently we asked those on our email list to share their opinion on Iowa’s new tax reform law. Over 65 percent of respondents said it is a good start, but we need more tax relief, and 72 percent think it will create economic growth and more jobs.

Many Iowans left comments at the end of the survey, both supportive and critical of what was enacted. Here are a few of those comments, with the rest included in the survey results.

“It is great to have state tax reform.”

“I feel that the present tax reform package allows politicians to say they have reduced our income taxes but it still allows state government to grow at a faster rate than the state population or citizen’s personal income.”

“Iowa needs a constitutional amendment which limits the growth of government expenditures.”

ITR Hosts Roundtable in Ottumwa

Last week ITR hosted a roundtable breakfast in Ottumwa. Candidates Dr. Mariannette Miller-Meeks (SD41), Holly Brink (HD80), and Cherielynn Westrich (HD81) were joined by Senator Ken Rozenboom and many area taxpayers. It was a great discussion. One attendee simply said, “Change Iowa!” Some other comments shared were:

“Iowa has some of the nation’s highest corporate and individual income tax rates. It doesn’t matter how beautiful, how safe, or how great our education system is, if people can’t afford to live here, they are not going to stay.”

“This year’s tax reform will reduce rates, leading to economic growth. That will trigger a further reduction in rates.”

“Businesses don’t pay taxes. Those taxes are passed on in the form of higher prices to consumers.”

“We need basic services from the government but WE can decide what to do with our own money better than the government.”

It is good to hear candidates and Iowa taxpayers share ITR’s vision of smaller government, lower taxes, and limited regulations.

How Does Tax Relief Help Iowans?

A business owner told us when the legislature passed tax relief, he wouldn’t pocket extra cash, he would turn around and reinvest in his business. That means more jobs and higher wages.

ITR fights to help families and businesses not just stay in Iowa, but to help them grow and thrive.

Tax Reform is Helping Iowans

Iowa families and businesses are feeling the pro-growth impact of federal and state tax reform. ITR recently attended a small business roundtable discussion with Governor Kim Reynolds, Senators Joni Ernst and Chuck Grassley, Linda McMahon (Administrator of the U.S. Small Business Administration), and six Iowa small business owners. The discussion focused on the positive impact of the recent tax law changes.

Kim Augspurger, owner of Saxton, Inc. said, “Tax reform has given our small business clients confidence in the economy. They are willing to spend and that leads to growth. We just recently added a new employee.”

Primary Source owner Mary Ann Kennedy shared, “Reform dollars are not going into our pockets, they are going back into the business.” This theme was repeated by all the participants when they shared they were purchasing new equipment, expanding buildings, increasing salaries and benefits, and giving bonuses for the first time.

Iowa’s tax reform legislation passed earlier this year is a good step in the right direction. Through a combination of rate cuts, increased deductions, and additional conformity with the federal tax code, it is estimated that Iowans will receive over $1 billion of tax relief by 2022. While the benefits are real, there is still work to do; the most important thing that can be done in the Iowa Capitol next year is to speed-up the implementation of additional planned rate cuts.

Allowing people and businesses to keep more of their own money increases optimism, economic confidence, and growth.

Taxes Matter!

Big spenders like to pretend taxes don’t influence behavior or stifle growth. Over ten years, 103 new health care locations added in counties on the Iowa and South Dakota border: eight in Iowa and 95 in South Dakota. Job growth in the same period: 5% in those Iowa counties, and 75% in South Dakota. South Dakota has no state income tax. Taxes matter!

What Do You Say?
Take a Two Question Survey!

What do you think about Iowa’s current and future economic growth? Take a minute to share your thoughts with this two-question survey.

For Iowa to Lower Tax Rates,
it Must Show Spending Restraint

How can Iowa make sure its recent tax reform is fully implemented, including the adoption of fewer and lower tax rates in 2023? The only proven way to lower tax rates is with spending restraint. Some of us in our personal lives have learned Dave Ramsey’s lesson that you cannot out-earn your own stupidity. No state can out-tax bad budgets. Iowa’s 99 percent spending limitation needs to be strengthened by a state constitutional spending limitation amendment.

Lower tax rates in conjunction with controlling the growth of spending provides the best formula for economic growth and opportunity for all Iowans. Read more here.

ITR Across Iowa

Last week, ITR attended the Midwest Policy Summit in West Des Moines. The Summit featured 10 public policy organizations from Iowa, Kansas, Minnesota, Missouri, Nebraska, and two national organizations.

At all levels of government, bad policy leads to tax increases. Sharing ideas of what has been successful and what has fallen short regarding state budgets, spending reform, and tax policy will help each organization advance principles to create opportunity and promote liberty.

Governor Reynolds Signs Tax Reform Bill

Iowa’s new tax reform bill was signed into law on Wednesday in Hiawatha and Iowans for Tax Relief President Chris Ingstad and board member Peter Voorhees were in attendance. ITR applauds Governor Kim Reynolds and the legislature for taking action on tax reform this session. Most of the reforms are phased-in over time, with tax savings increased in each successive year. We look forward to working with legislators to help implement additional important reforms during the next legislative session.

Cedar Falls Small Business Luncheon

Thursday afternoon, Congressman Rod Blum and four Iowa legislators discussed federal and state tax reform, and small business issues at a luncheon hosted by ITR and the National Federation of Independent Business in Cedar Falls.

Congressman Blum said, “America has the finest entrepreneurs and small business people in the world. Get off our back with excessive regulations. Get out of our back pockets with excessive taxes. Five years ago, reducing taxes was number one on my list. We had the highest corporate tax rate in the developed world. We followed through, in spades, in reducing taxes. Now we can be competitive with the rest of the developed nations. Every business I talk to in Eastern Iowa, small, medium, or large, is buying and investing in capital expenditures in plant and equipment.”

When discussing bills passed by the Iowa legislature the last two years, he said, “I couldn’t be more proud of my state’s legislators. Hats off to you.”

Iowa’s newly-passed tax reform was a heavy lift because of recent tight budgets and this reform is a good step in the right direction. It will allow Iowa families and businesses to keep more of their own money. As the state continues to grow and Iowans do better, there is more work to be done. Iowa needs to continue to reduce the tax burden for everybody. Iowa legislators had this to say about the reform:

“The initial tax reform bill is just one step. We are going to continue to fight to make sure tax reform is uniform and fair across the board. People keeping more of their own dollars will help Iowa’s economy.” – Rep. Walt Rogers

“The rest of the tax cuts in the bill are dependent on triggers. If we don’t meet those triggers, a lot of the good provisions are not going to go into effect. I would like to see us lower the trigger thresholds, so we will have a better chance of being able to get the whole bill into effect.” – Rep. Sandy Salmon

“The government likes to take in more and say they are going to do more. But I would ask, are you getting your bang for your buck? I think the government has failed to recognize that small businesses are out creating jobs.” – Sen. Craig Johnson

“I am glad to see Section 179 did make it back and will be coupled. That will help Iowans.” – Sen. Annette Sweeney

House District 47 Primary Candidate Forum

For over 40 years, ITR has been promoting the benefits of lower taxes, reduced regulation, and more economic freedom. Two Iowa House of Representatives hopefuls echoed those same thoughts during a primary candidate forum we hosted in Boone on Tuesday evening.

“The best answer is to slowly reduce the scale of government…” – Victoria Sinclair

Memorial Day is a day to remember and honor those who paid the ultimate cost for the rights we all enjoy. While we are grateful for our veterans and those who serve today, please pause for a moment at some point this weekend to reflect on those who, in the words of President Lincoln, “have laid so costly a sacrifice upon the altar of Freedom.”

Beer’s Most Expensive Ingredient: Taxes

According to the Beer Institute, “Taxes are the single most expensive ingredient in beer, costing more than the labor and raw materials combined.” Research has shown that approximately 40 percent of the retail price of beer is dedicated toward covering all the applicable taxes.

Did you even realize you were paying a beer tax? The Tax Foundation released a report comparing the beer tax in each state. With summer quickly approaching, we can expect to see a seasonal uptick in beer sales, thanks to much-anticipated barbecues, baseball games, and the like. But when we fork over cash to buy yet another six-pack, how much is being used to cover the expense of brewing the beer itself? Less than one might think.

ITR’s Policy Analyst, John Hendrickson, also analyzed government’s unquenchable thirst for tax dollars in an article for Tax Education Foundation earlier this year.

Property Taxes

Next September’s property tax bills will shock many central Iowa residents and businesses. A closer look at tax statements will show that even though the property tax rate may not have changed, the tax bill may be considerably higher. The reason for the discrepancy illustrates a flaw in the way Iowa’s property tax system works.

This week, a Taxpayers Association of Central Iowa article stated, “When there’s huge growth in taxable valuation, even with constant rates, property tax owners will experience a large increase in their taxes and local governments will reap a windfall in revenue. All the while, some local officials will take credit for holding the rate constant.”

While this excellent article addresses Central Iowa communities specifically, the same dynamic is playing out all over the state. To protect property owners, ITR has long supported a realistic limit on the percentage increase in the total dollar amount of property taxes on any property in any year. While we will continue that advocacy, sometimes the best way to reign in property tax bills is simply asking your local elected officials why are they taking and spending so much of your money?

ITR Across Iowa

ITR has been promoting the benefits of lower taxes, reduced regulation, and more economic freedom since our founding 40 years ago. It was great to hear Iowa House of Representatives hopefuls echo those same thoughts during the primary candidate forum we recently hosted in Mt. Pleasant.

Next week we will host another candidate forum in Boone along with a roundtable luncheon in Cedar Falls with Congressman Rod Blum, and State Senators Craig Johnson and Annette Sweeney, and State Representatives Walt Rogers and Sandy Salmon.

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The tax reform legislation passed by the Iowa House and Senate on Saturday is a good step in the right direction. Through a combination of rate cuts, increased deductions, and additional conformity with the federal tax code, it is estimated that Iowans will receive over $1 billion of tax relief by 2022. If certain revenue targets are met that relief could grow to over $2 billion by 2024. Iowans for Tax Relief appreciates the work done by the Iowa Legislature and Governor Kim Reynolds in passing these important reforms.

Substantial changes to Iowa tax law are phased-in beginning in 2019. The next four years will bring the following changes to our state’s tax code:

Individual income tax cuts for all income levels, including a reduction in the top individual rate from 8.98% to 8.53%.

A reduction of the top corporate tax rate from 12.0% (the nation’s highest!) to 9.8%.

Modernizing the sales tax code to provide a level playing field between online businesses and brick and mortar businesses on Main Street.

Increases in the Section 179 expense and Qualified Business Income deductions utilized by farmers and small businesses.

If Iowa’s revenue can reach a targeted amount of $8.3 billion by Fiscal Year 2022 (up from an estimated $7.1 billion in Fiscal Year 2018), additional changes will be made to the tax code:

Federal deductibility will be eliminated, the number of income brackets will be reduced from nine to four, and the top individual rate will be reduced from 8.53% to 6.50%.

Iowa income tax will be calculated based off of a taxpayer’s federal taxable income, meaning Iowans will utilize the same itemized or standard deductions for their state and federal returns.

In total, the changes that could be triggered in 2022 could bring an additional $1 billion in relief over just two years.

The reforms passed by the Iowa legislature provide a solid base to build off of. But, as always, there is more that can be done. The additional changes that could be triggered for individuals in 2022 require the state’s revenue to grow at least 4% a year for four years in a row and that is a hurdle the state has not cleared very often over the past 20 years. While Iowans for Tax Relief supports the use of revenue triggers, taxpayers would be benefited by a more modest growth requirement and more frequent rate reductions. The much-needed reduction in the corporate rate could be improved on, as well. The new corporate rate of 9.80% is still tied for the highest of all of Iowa’s neighboring states.

Iowa’s families and businesses have already begun to feel the pro-growth impact of federal tax reform. The tax relief delivered by our state this year continues to build on this historic legislation. And if our state can deliver additional tax relief to Iowa’s families and businesses, that impact will be multiplied.

Iowans for Tax Relief applauds the legislature for taking action on tax reform this year and looks forward to working with our legislators next year to help implement these vital additional reforms.

Late Friday afternoon, Governor Kim Reynolds and Iowa House and Senate leadership released a summary of their tax reform agreement. From the details given, ITR is glad to say we support this plan because it is not just tax reform, it is tax relief!

In last week’s Watchdog, we shared the three principles we have been encouraging legislators to include in the final tax reform bill. These are:

Reduce Rates

Include both Individual and Corporate

Couple and Conform to Federal Code

This tax relief plan includes all three principles and when fully implemented will also:

Reduce the top individual rate from 8.98% to 6.5%.

Reduce the number of individual income tax brackets from nine to four.

Reduce the nation’s highest corporate income tax rate of 12% to 9.8%.

Use revenue triggers to reduce rates and provide a budget safeguard.

Increases Section 179 and Qualified Business Income (QBI) deductions for farmers and small businesses

Modernizes Iowa’s sales tax code to provide a level playing field between online businesses and brick and mortar businesses.

Gradually eliminate federal deductibility.

Automatically couple with most federal tax laws.

Providing a comprehensive review of tax credits.

ITR president Chris Ingstad said, “As we wait to see all the specifics included in the final bill, the details released will allow Iowans to keep more of their hard-earned dollars and make the state more competitive with other states. The strong voice of everyday Iowans was heard over the unending cry of special interests. For that, we thank Governor Reynolds, the Iowa House, and the Iowa Senate.

Tax reform and budget negotiations continued this week and will continue into next week. During these ongoing discussions about tax reform, we have heard some policymakers argue too often about looking out for the state budget and protecting Iowa’s spending priorities. While it is true that state government must fund needed priorities, our legislators need to keep their discussions focused on looking out for the budgets of Iowa families and Iowa businesses.

We believe policymakers are crafting a plan that will put Iowa on a path to a smaller tax burden for its citizens while still collecting enough revenue that the state budget won’t have to undergo austerity-style cuts.

As legislators work to hammer out an agreement on tax reform, they are getting closer to budget targets, as well. House and Senate targets are believed to be about $5 million apart. With much of the discussion occurring in closed-door meetings, the most reliable source of progress updates are comments made publicly.

House Majority Leader Chris Hagneow said, “Well, there’s always something dramatic around the corner in this place. I will say this, there is nothing that’s quite like a legislative shutdown. It has twists and turns and ups and downs and then, in the end, it all fits together. It’s not even that it’s acrimonious or anything like that. It’s productive, but it just takes time to have a series of meetings to put all those pieces together.”

Regarding those budget spending targets, Senate Appropriations Committee Chairman Charles Schneider added, “But we still have different targets. For those areas where there’s still some daylight between us, we’re trying to get closer together and come up with the final numbers.”

Passing legislation that delivers true tax relief will matter far more than what is said during negotiations. After all, the most important task they can accomplish is empowering Iowans with more economic freedom.

Important Principles to Remember
When the Pieces Fall Into Place

Iowans for Tax Relief continues to be supportive of the broad conversation about tax reform that is occurring through dueling legislation between the House and the Senate. Bills introduced by both chambers, as well as the Governor, all reduce our rates and simplify our tax code to varying degrees. As our members know, our top individual income tax rate of 8.98% is one of the highest in the country and our top corporate tax rate of 12% is THE highest in the country. We cannot remain such an outlier in comparison to our neighboring states and the rest of the country.

Comprehensive tax reform should include many important principles, but today we write about the same three principles we have been encouraging legislators to include in the final tax reform bill.

1. Reduce Rates

The first and most important thing that tax reform should do is to reduce rates as much as possible. Whatever legislation is passed in Iowa needs to be tax relief, not just tax reform. If federal deductibility, which is Iowans’ ability to deduct their federal tax payments from their Iowa tax calculations, is eliminated then Iowa’s top rate needs to be reduced to somewhere between 5.5% and 6.0% to prevent some taxpayers from seeing a tax increase.

2. Include both Individual and Corporate

Tax reform also should be comprehensive, meaning our legislators must address both the individual and corporate tax codes. In addition to the high rate of 12%, our corporate code has a patchwork of credits of all shapes and sizes. Many of those credits are likely valuable but others could be better served by being reduced or eliminated in exchange for lower rates for all. At the very least Iowans deserve an in-depth review and accounting of their effectiveness.

3. Couple and Conform to Federal Code

And finally, whether it is considered coupling or conformity, Iowa’s income tax code should mirror the federal tax code as much as possible. Aside from removing the complexity of separate calculations for many items, conformity also provides greater predictability for planning purposes and reduces the risk of unintended consequences when one tax code encourages something that the other does not. Some of these items would be the Qualified Business Income Deduction, Section 179 expensing limit, and child care expenses.

To date, there has not been much public agreement between the House and Senate on the direction of tax reform. While the Senate passed one tax reform bill in February, the House has so far been continuing to work on their own plan which was released at the end of last week. Because of the lack of progress the Senate bill has made in the House, the Senate released the framework of a second tax reform plan at the end of last week, too. Ultimately both bodies could hammer out a compromise before passing a bill on the floor of their respective chambers, or they could both pass quite different bills and work on a compromise in a conference committee.

Regardless, we believe that the above three principles are a necessity in the final tax bill.

Iowans spoke loudly in November 2016 when they sent so many pro-taxpayer legislators to the Capitol. They expect tax relief to become a reality, not just a campaign promise.

Tax reform was the dominant topic at the Capitol this week. A public hearing for Governor Reynolds’ plan was held Monday evening. Late Wednesday afternoon, the Iowa House unveiled their proposal. Thursday afternoon, the Iowa Senate introduced a revised reform plan. Based information released publicly, here is how they compare:

The goal of tax reform is to protect the pocketbooks of hard-working Iowa families and businesses, not to protect spending increases for state government.

Legislators need to hear from you!

Tell Legislators to Deliver Tax Relief NOW!

Before any tax reform reaches the Governor’s desk, the House and Senate will have to reach agreement on a compromise plan. Even though this legislative session was scheduled to end Tuesday, April 17, it appears it will take a few more weeks to wrap everything up. Keep an eye on your inbox for new Tax Action Alerts.

]]>http://www.taxrelief.org/watchdog_04-13-18/feed/0The Legislature Should Not Delay Tax Reformhttp://www.taxrelief.org/04-13-18/
http://www.taxrelief.org/04-13-18/#respondFri, 13 Apr 2018 13:58:55 +0000http://www.taxrelief.org/?p=1431Continue reading "The Legislature Should Not Delay Tax Reform"]]>Tax reform has garnered much debate during this legislative session with Governor Reynolds and Republicans in the legislature making tax reform a priority. The legislature is currently debating three proposals offered by Governor Kim Reynolds, Senate Republicans, and House Republicans. However, the session is almost over, and delivery of real tax relief is not guaranteed. The Iowa legislature should not delay tax reform; it is imperative that legislators work together to pass a pro-growth tax bill.

Iowa has a historic opportunity to build upon the economic growth created by federal tax reform. The passage of the Tax Cuts and Jobs Act and President Donald Trump unshackling the economy from burdensome regulations is creating economic growth across the nation. This is resulting in lower unemployment and businesses are optimistic about the economy. The National Federation of Independent Businesses (NFIB) recently reported that the small business optimism index was at a 16th month high.

Iowa suffers from high tax rates and a complex tax code that needs to be reformed. By lowering tax rates, the Iowa legislature can build upon the economic impact of federal tax reform and encourage further economic growth in Iowa, making our state more competitive.

Opponents of tax reform argue Iowa cannot afford tax cuts and any tax reform will result in a budget crisis similar to Kansas. Others have offered an argument that tax reform should be delayed.

Delaying tax reform in Iowa would be a mistake. Iowa will see additional revenues because of the federal tax cuts, but that money should be returned to taxpayers and not used for future spending. Even if the legislature delayed tax reform, the likelihood of state government not spending the new revenues would be the same as Iowans disavowing bacon.

Legislators can also avoid harm to the budget by following the example of North Carolina. Since 2013, an economic policy agenda of reducing tax rates, regulations, and controlling the growth of spending has been advanced in North Carolina. North Carolina has proven that a state can lower tax rates without creating a budget crisis. Pro-growth policies have created a stronger economy, provided more opportunities, and ushered in fiscal stability. North Carolina is also funding the priorities of government.

Iowa should take note of the lesson Connecticut has learned; higher taxes and more spending does not bring about better government. Connecticut has raised taxes at least three times, and they are still in a fiscal crisis. History is filled with examples from both the federal and state level that governments cannot tax and spend their way to prosperity.

Tax reform, if done responsibly, will not decimate the budget. The purpose of tax relief is not to gut or eliminate government, but rather create further opportunities by encouraging private sector growth. The objective of controlling government spending, as John Hood, Chairman of the John Locke Foundation, argues, “is to keep government from encroaching too much on the private investment that is the primary driver of economic progress.”

Iowa can avoid the mistakes of states such as Kansas by following North Carolina’s example of restraining the growth of spending.

Iowa policymakers should not be afraid of enacting meaningful tax reform. Pro-growth tax reform will lower both the individual and corporate tax rates and reform and eliminate Iowa’s complex system of tax credits. By lowering rates Iowa will become more competitive and the subsequent economic growth will create opportunities for all Iowans. High tax rates are not just harmful to economic growth, but they also hinder investment and opportunity.

Delaying tax reform would be a setback for Iowa’s taxpayers and our economy. By lowering tax rates and controlling spending, Iowa will not only create a stronger economy with more opportunities, but also provide for the priorities of state government.

Tax Reform Public Hearing
Legislators want to hear from you!

This year we have a once in a generation opportunity to define what Iowa will look like for you, your children, and your grandchildren but we need your help!

The Iowa House has scheduled a public hearing on tax reform for 5:00 p.m. Monday to hear from citizens. Big spending special interests will have people portraying doom and gloom if tax cuts are passed. We need citizens like you to make your voice heard.

YOUR voice supporting and encouraging legislators to pass tax reform is the voice that will make it happen!

If legislators do nothing, a majority of Iowans will see their taxes increase. In December Congress passed and the President signed the Tax Cuts and Jobs Act lowering federal income taxes for a majority of Iowans. These taxpayers will likely see their state tax burden increase because of federal deductibility.

Iowa has a burdensome and complex tax code. We need:

To lower income tax rates across all brackets and reduce the top individual rate from 8.98%, one of the nation’s highest.

To Increase deductions for farmers and small business owners

To let Iowans keep more of their money in their bank accounts.

Will you make your voice heard?
Taxpayers across Iowa are counting on you.

__________________________________________________________

Legislation Reducing
Property Tax Backfill Payments Advances

The assessed values of commercial and industrial real estate were rolled back as part of 2013’s property tax reforms. To make up for the reduction in property tax revenue, Iowa’s state government “backfills” local governments. More than $152 million is paid to cities, counties, and school districts each year. Wednesday, a House subcommittee advanced a bill to phase out these payments. A similar bill has been introduced in the Iowa Senate.

Each local government is unique. Since the reform:

Many governments now have property tax revenue that EXCEEDS 2013 levels, even without including backfill payments. Some governments also see year to year growth in property tax revenue that exceeds the amount of the backfill. Property tax assessments continue to climb around the state.

The State of Iowa needs to consider its backfill payments within the framework of total property tax revenue growth.

For many local governments, reduced or eliminated backfill payments wouldn’t mean budget cuts, it would mean they will be managing with smaller increases. For local entities who have already been made whole:

This is not a cut.

This shouldn’t lead to property tax increases.

This will slow the growth of spending.

Iowans for Tax Relief believes now is the time to decide how the state is involved in property tax payments.

A report released by CNS News shows state and local governments collected a record amount of taxes in 2017. Data released by the U.S. Census Bureau and adjusted for inflation shows individual income taxes, general sales/gross receipts taxes, and property taxes took more dollars from taxpayers than ever before.

Tax

$ Collected

Individual Income Tax

$404 billion

General Sales & Gross Receipts Tax

$386 billion

Property Taxes

$573 billion

This nationwide trend shows why passing tax reform in Iowa this year is so important.

The Iowa Senate has passed their tax relief plan and the Iowa House continues to work on advancing Governor Kim Reynolds’ proposal. While both plans would deliver real tax relief to Iowans, there are significant differences between them. The House and Senate will need to agree to a compromise plan before a bill can be signed by the Governor. However, the legislative session is scheduled to end April 17. We can’t let time run out on this opportunity!

Tell them to find a solution that doesn’t involve new taxes and more government!

This week an Iowa Senate subcommittee began considering legislation that would end the state’s beverage containers control program, better known as the “bottle bill”. The program proposed to take its place would have state government oversee and administer a new recycling program that would be funded by two new taxes.

Iowans for Tax Relief is opposed to SSB1186 in its current form because it expands the size and cost of government. Although indications are that there will be substantial changes made to the proposal before it advances any further, our legislators must know that any change to the existing bottle bill has to keep the government from expanding.

As written this bill would:

Create two new taxes. One of those taxes would be used to “develop public relations campaigns, promote teachers-going-green-lesson plans, and coordinate community service outreach.”

Require various state departments to create rules, administer programs, and otherwise oversee the different facets of this bill.

We don’t want new taxes or more government!

Two weeks ago the Revenue Estimating Conference increased the final revenue projection, but it still fell $3.6 million short of covering Iowa’s $7.274 billion in spending from the General Fund.

This week, legislators cut about $35.5 million the current year’s budget to cover the shortfall and leave a projected ending balance on June 30 of $31.9 million.

The cuts include:

$11 million from the University of Iowa and Iowa State University

$10 million from the High-Quality Jobs Program

$4.3 million from the Department of Human Services

$3.4 million from the Department of Corrections

$1.6 million from the judicial branch

$500,000 from community colleges

House Appropriations Committee Chairman Rep. Pat Grassley said, “We’re not Washington, D.C. We don’t print money. We have to have a balanced budget at the end of each year. So we have to go in and make decisions.”

With the legislative session scheduled to end April 17, lawmakers will now work on tax reform and next year’s budget.

The two tax reform plans being considered by the Iowa Legislature this year reduce income tax rates differently.

The Iowa House is advancing Governor Reynolds’ plan that lowers rates with revenue triggers.

When actual revenue increases to a predetermined level, rates are lowered.

If revenue does not increase, rates will not be reduced.

Triggers are a safeguard against uncertain revenue projections.

Iowa Senate passed a plan that would phase in rate reductions.

Tax rates reduced on a defined schedule.

Guarantees rate reductions.

Iowans for Tax Relief is supportive of both tax reform plans. Both proposals will let Iowans keep more of their money in their bank accounts.

Two states, Georgia and Idaho, have already cut their tax rates in response to federal tax reform. Will Iowa be the next state to follow the federal government in providing meaningful tax reform and relief to Iowans?

Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers. Email itr@taxrelief.org to share your opinion. We welcome your input.

This was the final week for bills previously approved by one chamber to pass out of the other, informally known as a funnel week. Bills failing to do so cannot be considered for the rest of the session. Budget, tax policy, and oversight bills are exempt from this deadline, though, and understandably took a back seat this week.

The Iowa Senate has already passed their tax reform plan, the Iowa Working Families Tax Relief Act and the Iowa House advanced Governor Reynolds’ tax reform plan through sub-committee two weeks ago. Based on the many discussions ITR has had at the Capitol this week, we believe the House will resume work on tax reform in earnest next week.

Modernizing Iowa’s Tax Code

Iowa has a sales tax code based on an economy that doesn’t exist anymore. With the click of a mouse or swipe on a smartphone, an increasing number of people purchase goods online, often allowing consumers to avoid paying sales tax.

Both tax reform plans being considered by the Iowa Legislature this year update Iowa’s sales tax to include online purchases, to varying degrees.

This is not a new tax for many of these items. Most internet-based transactions are already technically subject to sales tax through what is known as a use tax, which the consumer is required to remit directly to the state themselves.

Modernizing our sales tax will stop the erosion of our tax base.

Modernization will level the playing field for all retailers by not subjecting main street retailers to a different set of rules than internet businesses.

We support modernizing the Iowa tax code as a part of broad income tax reform. As proposed within both plans being considered, preserving our sales tax base will allow income tax rates to be reduced.

Americans for Tax Reform reports numerous Iowa businesses have given bonuses, increased wages, or expanded operations because of the Tax Cuts and Jobs Act passed by Congress late last year. Visit atr.org/iowa to see the list.

Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers. Email itr@taxrelief.org to share your opinion. We welcome your input.

The three-member state Revenue Estimating Conference estimated today that FY 2018 tax receipts will grow $33 million more than projected in December. This increase is mostly because of the federal Tax Cuts and Jobs Act and the ability of Iowa taxpayers to deduct federal tax payments from their state income taxes. Conference member Dave Roederer said the economy is, “Continuing to grow. It’s just not growing at a rapid pace, but at least it is stable.”

The projected increase would erase some of the current year’s budget shortfall projected in December, though actual revenue will continue to be collected through June 30, 2018, meaning additional revenue variations could yet occur. While a deappropriation bill will still need to be passed by the Iowa Legislature, the House and Senate have not yet agreed on what the final dollar amount of budget cuts will be.

The REC also increased FY 2019 estimated revenue to over $7.7 billion. This is an increase of approximately $200 million from December’s projection and, much like 2018’s updated estimate, attributes much of that increase to federal tax law changes. The legislature is required to use the lower of the December and March estimates when crafting 2019’s budget so by law they will be limited to 99% of the $7.5 billion estimated in December. This estimate is the ceiling for spending, not the floor. Even with increasing revenue, it would be prudent to not spend the maximum allowed and slow the rate of any spending increases.

As expected, there was no action taken on the two tax reform plans being considered by the Iowa Legislature.Last week the Iowa Senate passed a plan that would lower individual and corporate income tax rates and provide $1 billion a year in tax relief once fully phased in. Governor Reynolds’ plan, which would provide $1.7 billion in tax relief over the next five years, was advanced through a House Ways and Means subcommittee last week as well. Rep. Peter Cownie, who chaired the subcommittee, indicated there would not be further action on tax reform in the House until after March 16.

Iowans for Tax Relief is supportive of both tax reform plans. Both proposals will let Iowans keep more of their money in their own bank accounts.

After federal tax law changes, many Iowans have more money in their paychecks due to less money withheld from their paycheck. However, is the amount correct?

To help determine the correct amount withheld to avoid an unforeseen tax bill next year or to maximize your take-home pay, use one of the following withholding calculators.

Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers. Email itr@taxrelief.org to share your opinion. We welcome your input.

Late Wednesday evening, Iowa Senate Republicans debated and passed their tax reform plan, which will now be sent to the House for consideration. The Iowa Working Families Tax Relief Act would provide $1 billion a year in tax relief once fully phased in, through individual and corporate reforms. This proposal would repeal federal deductibility and lower rates. The top individual tax rate of 8.98 percent would be lowered to 6.3 percent and Iowa’s high corporate tax of 12 percent would be lowered to 7 percent. These lower rates will then be indexed to the rate of inflation in future years. Additionally, the proposal would reform and reduce Iowa’s complex system of business tax credits.

Thursday morning, the Iowa House advanced Governor Reynolds’ tax reform plan through sub-committee. This proposal would provide $1.7 billion in tax relief through 2023, focusing on reforms for individuals. The proposal would gradually phase out federal deductibility, lower individual income tax rates from 8.98 percent to 6.9 percent, and expand deductions for small business owners and farmers. Revenue triggers would be used to ensure state revenue increases before lowering rates.

This is great progress! Iowans for Tax Relief is supportive of both tax reform plans. They address Iowa’s burdensome and complex tax code differently but do deliver real tax relief. Each would lower income tax rates across all brackets and reduce the top individual rate from 8.98%, the fifth highest in the nation. Farmers and small business owners will benefit from increased deductions. Both proposals will let Iowans keep more of their money in their bank accounts.

The legislative session is scheduled to end in just six weeks. It is crucial a tax relief bill is passed by both chambers and signed by Governor Reynolds. Doing nothing will increase taxes!

In December Congress passed, and the President signed the Tax Cuts and Jobs Act lowering federal income taxes for a majority of Iowans. These taxpayers will likely see their state tax burden increase because of federal deductibility.

We applaud the Senate’s accomplishment and are encouraged by discussions in the House. It is important for Iowa legislators and Governor Reynolds to finish the job and provide tax relief by reforming the Iowa tax code this year.

Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers. Email itr@taxrelief.org to share your opinion. We welcome your input.

]]>http://www.taxrelief.org/watchdog_03-02-18/feed/0Iowa Needs Tax Reform Now: Delay Will Result in Tax Increases on Iowanshttp://www.taxrelief.org/tax_reform_03-01-18/
http://www.taxrelief.org/tax_reform_03-01-18/#respondThu, 01 Mar 2018 21:27:01 +0000http://www.taxrelief.org/?p=1238Continue reading "Iowa Needs Tax Reform Now: Delay Will Result in Tax Increases on Iowans"]]>Prior to the start of this legislative session, Governor Kim Reynolds and Republican leaders in the Iowa legislature identified tax reform as a top priority. With Congress passing the Tax Cuts and Jobs Act in December, tax reform became an immediate priority for Iowa. While the Tax Cuts and Jobs Act reduced the federal income tax burden for many Americans, an overwhelming majority of Iowans who pay federal income taxes will likely see their state tax burden increase because of federal deductibility. Iowans have long been able to deduct their federal tax payments from their state income taxes. This has been a worthy taxpayer protection when federal taxes increased. Today, however, the roles are reversed and a reduced federal tax burden means taxes in Iowa will go up.

In addition to fending off tax increases for many Iowans, the Governor and the Iowa legislature are seizing this opportunity to re-write the Iowa tax code and provide the first income tax cuts in 20 years. Governor Reynolds and the Iowa Senate have both released reform plans that would lower tax rates and simplify Iowa’s tax code in order to provide tax relief to most Iowa taxpayers. Senate Republicans recently passed their proposal. The Iowa House took their first step when the Governor’s tax bill was passed by Republicans in a Ways and Means subcommittee.

The Governor’s plan calls for $1.7 billion in tax relief through 2023, focusing on reforms for individuals. The proposal would gradually phase out federal deductibility, lower individual income tax rates from 8.98 percent to 6.9 percent, and expand deductions for small business owners and farmers. Revenue triggers would be used to ensure state revenue increases before lowering rates.

The Senate has offered a broader plan, calling for $1 billion a year in tax relief once fully phased in, through individual and corporate reforms. This proposal would repeal federal deductibility and lower rates; the top individual tax rate of 8.98 percent would be lowered to 6.3 percent and Iowa’s high corporate tax of 12 percent would be lowered to 7 percent. In addition, the proposal would reform and reduce Iowa’s complex system of business tax credits and further expand deductions for small business owners and farmers.

Each proposal has merit and as the Senate and House continue to shape their respective legislation, lawmakers should ensure that any reform includes some crucial provisions to achieve successful tax reform.

Perhaps the most important lesson is to understand tax relief and spending cannot be separated.

North Carolina, Indiana, and Wisconsin have lowered rates without creating a budget crisis. Many opponents of the tax reform and relief proposals introduced in Iowa claim that these proposals will result in a fiscal crisis. Iowa policymakers can avoid crisis by controlling spending and by utilizing revenue triggers, or otherwise phasing in rate cuts. “The supply-side effects of fiscal policy are real, but they don’t negate the need for spending discipline,” noted John Hood of the John Locke Foundation.

New tax legislation in Iowa also should be comprehensive, reforming individual and corporate tax codes. North Carolina and Indiana are examples, again, of states that have lowered their corporate tax rates along with the individual rates to ensure that their tax codes are fair, simple, and encouraging of growth. Iowa’s corporate tax rate of 12 percent is the highest in the country and necessitates the existing complex system of tax credits. Iowa’s lawmakers should use this opportunity to reduce both the high corporate tax rates and the accompanying use of corporate tax credits.

The plans of Governor Reynolds and the Senate would modernize Iowa’s sales and use tax by including online sales and other digital services. Iowa’s tax code is outdated and needs to be modernized to keep pace with the way consumers obtain goods and services. Iowa’s sales and use tax does not reflect the modern 21st century economy that depends greatly upon e-commerce. As David Roederer, Director of Iowa’s Department of Management said in December, “Iowa has a code based on an economy and a lifestyle that doesn’t exist anymore.”

Governor Reynolds, along with many in the legislature, understand Iowa needs pro-growth tax reform. High tax rates are harmful to economic growth. In addition to reducing rates, the final tax reform and relief measure should be comprehensive, use revenue triggers or phase-ins, reduce and reform the use of tax credits, and modernize the sales and use tax to bring fairness to Iowa’s small businesses.

By reducing tax rates and controlling spending, Iowa can provide tax reform and relief that will benefit all Iowans.

Iowa Senate Republican’s Tax Reform Plan

Wednesday, the Iowa Senate Republicans released their plan to rewrite Iowa tax code called the “Iowa Working Families Tax Relief Act.”

ITR President Chris Ingstad said, “In a little over one week, both Governor Reynolds and the Iowa Senate have released tax reform plans. We are encouraged the broad conversation about tax reform has begun and are optimistic real tax relief can be delivered to Iowans. This is long overdue. Iowa has some of the highest personal and corporate income tax rates in the country.”

The Senate plan lowers both the individual and corporate income tax rates and will most likely provide tax relief to most, if not all, Iowans. It simplifies our code by eliminating, reducing, or capping most business credits and by more closely mirroring recent federal tax law changes. Ultimately, this plan will address and reduce state government spending. Major items in the Senate’s plan are:

Individual income tax:

Reduces the number of tax brackets from nine brackets to five.

Reduces the top rate of 8.98% to 6.60% (and eventually to 6.30%).

Eliminates federal deductibility.

Changes starting point of state income tax calculation to “federal taxable income”. This means Iowa technically eliminates standard and itemized deductions, but effectively keeps them both, as well effectively keeping new federal qualified business income deduction.

Doubles retirement income exemption from $10,000 to $20,000.

Alternative Minimum Tax (AMT) is eliminated.

Couples Iowa tax code with more federal tax provisions.

Beginning in 2023, tax rates would be indexed to inflation and be reduced each year.

Corporate income tax:

Maintains four tax brackets.

Top rate drops from 12.0% to 7.0%.

Eliminates federal deductibility.

Many corporate credits are reduced, eliminated, or otherwise reformed.

Credit unions would now be taxed the same as banks.

Sales tax:

Sales tax would be collected on digital downloads, services, and subscriptions that are now not taxed.

Requires out of state online retailers to collect and remit Iowa sales tax. This is dependent upon a U.S. Supreme Court ruling or Congressional legislation. Iowa’s current tax code requires Iowans pay a use tax on these purchases, but that provision is effectively ignored.

Iowa currently has some of the highest income tax rates in the country. Since our founding 40 years ago we have worked to allow Iowans to keep more of their own money in their own pockets; the Senate and Governor’s tax reform proposals do that to varying degrees. ITR expects the Iowa House to soon craft their own tax reform legislation as well. Once they have done so there will be three proposals with the goal of ensuring Iowa’s tax system is not such an outlier in comparison to our neighboring states and the rest of the country.

ITR will continue to engage with elected officials and keep you, our members, informed of developments.

Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers. Email itr@taxrelief.org to share your opinion. We welcome your input.

ITR President Chris Ingstad said, “In a little over one week, both Governor Kim Reynolds and the Iowa Senate have released tax reform plans. We are encouraged by the broad conversation regarding tax reform and we are optimistic real tax relief can be delivered to Iowans. This is long overdue. Iowa has some of the highest personal and corporate income tax rates in the country.”

Iowans for Tax Relief (ITR) is encouraged by the release of Governor Reynolds’ tax reform package. ITR President Chris Ingstad said, “We agree with many of the Governor’s stated objectives and believe this plan would improve several aspects of the Iowa tax code. We look forward to digging into the details, especially surrounding federal deductibility, talking with our members, and working with the Governor, Lt. Governor, and legislators to deliver tax relief for all Iowans.”

Major items touted in the Governor’s plan are:

Reduction of the top individual income tax rate from 8.98% to 6.9% by 2023.

Increase the income level for the top rate from the current $73,260 to $160,965 by 2023.

Increase the standard deduction from $2,070 to $4,000 (single) and $5,090 to $8,000 (married).

Business owners could deduct 25% of the federal Qualified Business Income Deduction from taxable Iowa income.

An immediate increase in Section 179 expensing limits from $25,000 to $100,000.

Collection of sales tax on online purchases.

Elimination of the deduction of federal taxes from Iowa income.

The use of targets or “triggers” to protect the economy in the event of a downturn or to accelerate tax cuts during economic growth.

ITR knows the best way to create economic growth in Iowa is to have lower rates for all, control spending, and reduce regulatory burdens.

Some questions in particular that we are asking are:

What is the total tax relief provided to Iowans each year?

How many Iowans may see an increase in their tax burden if federal deductibility is removed as proposed?

What will the impact be on Iowans if the recently reduced federal tax rates increase as scheduled after 2025?

Will the proposed revenue triggers have the potential to reduce rates even lower than the stated 6.90%?

Could slower than expected revenue growth in future years lessen the rate reductions or would they be locked in?

Which online sales will be taxed and how might those revenues be dedicated to income tax reductions?

What is the reform plan for the corporate income tax and tax credits?

Ultimately the Governor’s tax reform proposal is the first step in a process that will certainly see the Iowa House and Senate weigh-in with their thoughts and likely plans of their own. ITR will continue to engage with elected officials and keep you, our members, informed of developments.

ITR President Chris Ingstad said, “We agree with many of the Governor’s stated objectives and believe this plan would improve several aspects of the Iowa tax code. We look forward to digging into the details, especially surrounding federal deductibility, talking with our members, and working with the Governor, Lt. Governor, and legislators to deliver tax relief for all Iowans.”

The Iowa legislature has understandably been undertaking the difficult process of de-appropriations since the session began. It is never easy to make cuts to the budget in the middle of a fiscal year, however, that is what must occur since our state’s spending is growing faster than our state’s revenue. But just because committee work and floor debate has been focused on immediate budget issues, that doesn’t mean work is not being done on the important topic of tax reform.

Iowans for Tax Relief continues to work with legislators and other allies at the Capitol to deliver not just tax reform, but true tax relief to all Iowans. We have had many positive discussions centered around the best path forward for Iowa and we believe that actual legislation reflecting some of those options will be released soon. Tax relief can only be achieved while keeping a watchful eye on spending. Priorities will have to be identified and serious discussions will need to take place about how to reduce or at least slow the growth of spending. Iowans need a plan that lowers rates and reduces the tax burden so they can keep more of their own money in their own pockets.

At an ITR co-sponsored small-business roundtable last week, Representative Dawn Pettengill said, “The more you feed the beast, the more government spends.” Last week’s Watchdog newsletter showed the beast is collecting an increasing amount from Iowa taxpayers. Rep. Pettengill is correct that spending is increasing as well. Legislative Services Agency data below shows spending divided into six major categories with the largest impact on the General Fund.

Over a 10-year period, General Fund spending increased $1.365 billion. This is an average annual increase of 3.4% from FY 2008 to FY 2017.

Of the six categories, Education had the largest dollar increase since FY 2008. School Aid increased $735.2 million or 3.1% over that time period. Medicaid spending grew $521.7 million. This is a 5.8% increase over the 10 years, the fastest rate of increase of the categories listed.

Over half of one major category, Property Tax Replacement, has only existed since FY 2015. The Commercial Property Tax Act, enacted in 2013, reduced commercial and industrial property taxes over a four-year period (FY 2015 to FY 2018). To compensate for local government lost revenue, the state “backfills” to make up the difference. Combined, the Commercial and Industrial Property Tax Replacement ($152.1 million) and the Business Property Tax Credit ($125 million) totaled $277.1 million in FY 2017. As ITR said in a Cedar Rapids Gazette guest column, it would be prudent for policymakers to review the property tax backfill, and make revisions to this policy if needed. Many counties’ property tax collections actually have increased even when the backfill is not taken into consideration.

Lawmakers need to remember government spending is not the solution for economic growth, nor can government solve every policy problem. Several states have demonstrated lower levels of spending and taxation not only lead to economic growth, but also the ability to adequately fund the priorities of state government.

Senate Majority Leader Bill Dix said, “The objective has always been the same – for more money to be kept by those who earn it.” We agree it’s the people’s money, not the government’s.

Over $440 Million Reasons to Control Spending

During the last legislative session, the Iowa Senate passed Joint Resolution 9, a spending limitation constitutional amendment. This measure would “limit the annual increase in spending from year to year to the lesser of 99 percent of the estimated revenue for that fiscal year, or 4 percent above the prior year’s revenue.”

Fiscal analysis of Joint Resolution 9 by the Legislative Services Agency (LSA) applied the rules of the resolution to the past ten legislative sessions and they found that “appropriations would have been lower than the enacted appropriations in seven of the fiscal years.” State Senator Charles Schneider wrote the LSA analysis “shows that if the spending limit had been in place since fiscal year 2012, state government could have spent $488.2 million less than it has.”

Taxpayers deserve better constitutional protections against the unquenchable appetite for government spending. Families and businesses across Iowa often must make difficult budget decisions on a regular basis. Seldom does government, at any level, say that they can function with less, it is always more and more funding. Read more

Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers. Email itr@taxrelief.org to share your opinion. We welcome your input.

State spending is a major area of concern of many in Iowa, especially when government continues to demand more taxpayer dollars. The Iowa code already limits the legislature to spend up to 99 percent of the projected revenues, but this is a weak spending limitation law. Currently, 15 states have a spending limitation requirement written into their constitutions. Although spending limitations can vary in their strength and design, they provide both a protection for taxpayers and sound fiscal policy by keeping spending in check.

As the legislature debates another round of deappropriations because of lower than expected revenues, it should be noted that Iowa collected close to $8.4 billion in revenue over the past twelve months. The reasons for slow revenue growth in Iowa can be debated, but the fact remains that Iowa must address spending.

Strengthening Iowa’s 99 percent spending limit with a constitutional amendment will make it more difficult for the legislature to circumvent or change the current law. In addition, a spending limitation amendment would allow state revenues a chance to grow at a faster rate than state spending, which would allow the legislature to reduce the income tax burden.

During the last legislative session, the Iowa Senate passed Joint Resolution 9, a spending limitation constitutional amendment. This measure would “limit the annual increase in spending from year to year to the lesser of 99 percent of the estimated revenue for that fiscal year, or 4 percent above the prior year’s revenue.” Fiscal analysis of Joint Resolution 9 by the Legislative Services Agency (LSA) applied the rules of the resolution to the past ten legislative sessions and they found that “appropriations would have been lower than the enacted appropriations in seven of the fiscal years.” State Senator Charles Schneider wrote the LSA analysis “shows that if the spending limit had been in place since fiscal year 2012, state government could have spent $488.2 million less than it has.”

The impact of this would have been substantial, especially with Iowa’s current tight budget. “Going into fiscal year 2017, we could have had a carryover surplus of at least $442.8 million. Had that been the case, we would not have had to deappropriate funds for fiscal year 2017, and we would not have to dip into the cash reserve fund to fill the remaining budget gap for this fiscal year,” stated Senator Schneider.

Strengthening the 99 percent spending limitation would help slow the growth of state spending. Constitutional scholar Rob Natelson wrote that “history teaches that politicians seldom control spending unless the constitution that regulates their conduct requires them to do so and the courts choose to enforce the constitution.” This problem is clearly seen at federal level with the uncontrollable spending that has resulted in a $20 trillion national debt.

Taxpayers deserve better constitutional protections against the unquenchable appetite for government spending. Families and businesses across Iowa often must make difficult budget decisions on a regular basis. Seldom does government, at any level, say that they can function with less, it is always more and more funding. Policymakers need to remember that income is an element of property. “When Americans formed their state and federal governments, they granted those governments considerable power over private property. This power included authority to seize and regulate as well as authority to tax property and to spend and borrow,” wrote Natelson. Government is necessary to provide essential services, but government should not have a blank check to continue to tax and spend.

If lawmakers are successful in keeping spending low and reducing the tax burden they will be encouraging Iowa’s economy to grow and at the same time be respectful of taxpayer’s dollars. Natelson argues that “raising taxes and spending usually impedes, rather than stimulates, state economies.” Policymakers need to remember government spending is not the solution for economic growth, nor can government solve every policy problem. Several states have demonstrated lower levels of spending and taxation not only lead to economic growth, but also the ability to adequately fund the priorities of state government.

Iowa taxpayers deserve constitutional protection and the best way to do this is to protect taxpayer interests through a stronger spending limit.

Iowa continues to collect an increasing amount of taxes. A Legislative Services Agency report shows the state collected $8.397 billion in net revenue during calendar year 2017. This is an increase of $222.9 million (2.7%) compared to calendar year 2016.

Over $6.898 billion or 82% of Iowa’s revenue for this period came from the individual income tax, sales/use tax, and corporate income tax.

This data once again shows Iowa does not have a revenue problem. Iowa has a spending problem!

State and local governments in Iowa spent a combined $9,282 per person on education, public welfare, health & hospitals, highways, and police in Fiscal Year 2015. When compared to 14 Midwest states that amount is the third highest. Only North Dakota and Minnesota spent more. Politicians from both parties compare government budgets to family budgets. This needs to be more than just talk. Spend less than you take in. The state should have priority-based budgeting to determine how to fund core government services while rooting out waste.

As Iowa’s tight budget situation lingers, the call for additional revenue sources continues to grow. The Des Moines Register recently published an editorial advocating a tax increase on beer to fund various programs and law enforcement efforts to deal with alcohol-related issues. The editorial board argued that a higher beer tax would discourage drinking and reduce the harmful effects of alcohol abuse.

Should government really try to use tax policy to limit our freedom of choice as a consumer? Should government declare war on behaviors and choices that they identify as harmful? Should we increase the tax on soda, red meat, and potato chips, too? Government should be focused on encouraging, protecting, and expanding freedom for citizens. Read more

Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers. Email itr@taxrelief.org to share your opinion. We welcome your input.

Cities and counties in Iowa often use Tax Increment Financing (TIF) as an economic development tool that reallocates property tax revenue for urban renewal. The original intent of TIF was to develop blighted areas or spur job creation. In many instances, TIF has been a valuable tool that encourages and enables growth, but criteria for TIF has been interpreted broadly over the years and therefore subject to abuse at times.

Once a TIF zone has been created, property values within the designated TIF area are frozen, creating a base valuation that continues to provide revenue to all applicable taxing authorities (cities, counties, schools, etc.). However, the additional property tax revenues from the TIF zone provide revenue only to the city or county that created the TIF. In Iowa when it is the local schools that do not receive those tax dollars from increased valuations, our state government backfills that amount by sending additional dollars to the school district. Taxpayers in that school district end up having to pay double, once on their property tax and a second time when their state income taxes are used to fund the additional payments to schools.

Current TIF guidelines create concerns for taxpayers and questions need to be asked on a case by case basis. Are the TIF districts already attracting private investment? Would the redevelopment happen even without the TIF designation? Is economic development simply shifting from one area within a region to another? Ultimately TIF should not favor one taxpayer over another.

This week HF 2063 was introduced by Rep. Gary Mohr. This bill’s goal is to ensure that TIF activities adhere to the true intent of the program by placing some common-sense guide rails around the program. Among other actions, this bill would :

Define blighted areas.

Establish duration limits for urban renewal areas that do not have time limits.

Limit the use of renewal funds that help businesses relocate.

Require school taxes not be divided under TIF but actually paid to the schools.

ITR is still researching all of the details of this brand new bill but this is a good example of legislation that intends to put the taxpayer first!

One of the most urgently needed steps to protect taxpayers is a U.S. Constitutional Amendment that requires a balanced federal budget. Iowans for Tax Relief strongly supports Iowa’s proposed resolution requesting a U.S. Constitutional Amendment to require a balanced budget. We prefer that the Amendment be proposed by the Congress, but since Congress has for so long failed to propose a strong Amendment, a U.S. Constitutional Convention (convention of the states) limited to fiscal issues should be held.

A resolution calling for a convention of the states was approved by an Iowa Senate State Government subcommittee on Wednesday. The Iowa House approved the measure last year and if passed by the full Senate before the end of this legislative session, Iowa will become the 13th state to make the call. Article V of the United States Constitution requires 34 states pass resolutions for a convention to occur.

Senator Jason Schultz said, “The reason for this is because our federal government is out of control. They are not going to reduce their own power or reach and it is up to the states, according to the convention, to pull the federal government back into the reins of the Constitution.”

PragerU created a short video explaining a convention of the states. Click on the image below to watch.

ITR has long-supported a balanced budget amendment to the U.S. Constitution. Iowans for Tax Relief founder and longtime chairman, the late David Stanley, wrote in this study, “America is in a desperate race between national bankruptcy and the rising tide of citizens’ demand for the Balanced Budget Amendment.”

Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers. Email itr@taxrelief.org to share your opinion. We welcome your input.

It appears legislators will tackle other issues before making the push for tax reform. The first priority will be to address the current fiscal year’s tight budget. State revenue in the form of tax collections continues to increase, but not as quickly as estimated. At least $30 million in spending for Fiscal Year 2018 must be cut mid-year to balance the current year’s budget. Senator Charles Schneider, chairman of the Senate Appropriations Committee, indicated he is working on a de-appropriation package made up of savings from state agency belt-tightening, spending cuts and “peeling back” unobligated tax credits or other transfers available to help balance the budget by June 30.

After addressing current year spending, legislators will turn to next year’s budget. This will most likely occur after the Revenue Estimating Conference meets in March. Because of previous overly optimistic revenue estimates and too much spending, Iowa had to use more than $100 million from reserve funds to balance 2017’s budget. At the time legislators committed to replenishing the funds this year, while Schneider said, “I’m expecting another tight year.”

When tax reform legislation will be introduced is not yet certain but elected officials continue to express their desire to improve Iowa’s tax climate. Rep. Guy Vander Linden, chairman of the House Ways and Means Committee, told the Iowa Association of Business and Industry his tax reform goals are to make the state more competitive for businesses, simplify taxes for all, and create a stable and predictable tax system.

“It’s got to be affordable for the taxpayer and the state,” Vander Linden said. “We can’t just do away with all taxes, but we don’t want to tax businesses and individuals to death.”

Lowering tax rates will not be easy, and this will require the legislature to address state spending. Last year, the Senate passed a constitutional amendment that would strengthen the 99 percent spending limitation. This amendment would have saved taxpayers close to $500 million since 2012. The Iowa House must pass the same resolution this year to complete step one of the amendment process. A prudent tax reform policy includes lowering spending to avoid deficits. Because of Iowa’s revenue situation, lower tax rates and spending reductions may have to be phased-in over a period of time.

Help Iowans Keep Their Tax Cut!

Because of federal tax law changes, most Iowans who get a cut in federal taxes will now have an increase in their state taxes. Some have called this a “windfall” for Iowa. This is NOT a windfall. All of those dollars must be returned to the taxpayer, not diverted to the state budget. If legislators do not address this issue, Iowa’s state government will consume the federal tax relief intended for you!

Lowering tax rates and reducing spending is a formula that will lead to economic growth in Iowa. As legislation is considered at the Capitol in subcommittees, full committees, or on the floor of either Chamber, Iowans for Tax Relief will register for, against, or undecided on bills based on how the bill impacts Iowa taxpayers. Email itr@taxrelief.org to share your opinion. We welcome your input.

House File 633
An act relating to the shared operational functions for purposes of supplementary weighting for school districts

We believe the supplemental weighting encourages greater efficiency and serves the interest of the taxpayers. This not only helps to save total education costs by having districts share resources but also helps more rural districts offer needed services for students.

ITR registered in support of this bill.

Senate Joint Resolution 9
A joint resolution proposing an amendment to the Constitution of the State of Iowa relating to the state budget by creating a state general fund expenditure limitation

ITR has long supported a spending limitation amendment. This amendment, if already in the Constitution, would have saved Iowa taxpayers close to $500 million since 2012. This spending limitation amendment is needed to help control the growth in state spending. Lower spending is necessary to achieve lower tax rates.

Senate passed SJR 9 in 2017 (referred to House Appropriations HJ 682)

ITR registered in support of this bill.

Senate Joint Resolution 8
A Joint Resolution applying for an Article V convention to propose amendments to the Constitution of the United States that impose fiscal restraints, and limit the power and jurisdiction of the federal government, and requesting Congress to similarly propose such amendments.

ITR has long supported a constitutional amendment to require the federal government to balance its budget and to limit the size and scope of government.

]]>http://www.taxrelief.org/watchdog_01-19-18/feed/0Tax Changes Ahead! Are they Good or Bad?http://www.taxrelief.org/watchdog_01-12-18/
http://www.taxrelief.org/watchdog_01-12-18/#respondFri, 12 Jan 2018 19:13:15 +0000http://www.taxrelief.org/?p=1065Continue reading "Tax Changes Ahead! Are they Good or Bad?"]]>

This week Governor Reynolds and leaders in the legislature have all talked about changing Iowa’s tax code.

“The objective has always been the same – for more money to be kept by those who earned it. Tax relief is about emboldening our middle class and encouraging our citizens to invest in themselves, their local businesses, and our state.”
– Senate Majority Leader Bill Dix

“More money in Iowan’s pockets is a great thing. Federal tax cuts for Iowans could mean a higher state tax burden in future years. Those tax cuts were intended to remain with the hardworking taxpayers of Iowa. Let’s make sure that happens!”
– Speaker of the House Linda Upmeyer

“This is a watershed year for the State of Iowa. When the federal government passed their tax reform, that really put a lot of pressure on us to do something. Now it is our time to act.”
– Senate Ways & Means Chair Randy Feenstra

We agree with much of the sentiment expressed. Iowa DOES need tax relief.

Because of federal tax law changes, Iowans who get a cut in federal taxes will now have an increase in their state taxes. Some have called this a “windfall” for Iowa. This is NOT a windfall. Those dollars do not get to help the state budget.

To get the dollars into taxpayers’ pockets, where they belong, the Governor proposed reducing rates and eliminating federal deductibility. ITR fully supports cutting rates and believes federal deductibility serves as a taxpayer protection but we are open to a discussion about its merits. Remember, when a protection like federal deductibility is removed, it’s never coming back.

At this time, no one has seen a detailed proposal or legislative bill. When we do, we want to support a bill that provides true tax relief for all, and doesn’t simply shift the tax burden among taxpayers. As our name says, we are Iowans for Tax RELIEF, not reform.

WEST DES MOINES, Iowa (January 9, 2018) — Iowans for Tax Relief (ITR) is encouraged that Governor Kim Reynolds, as well as the leadership of both the House and Senate, are committed to reforming Iowa’s tax code and providing tax relief for hard-working Iowans. Lowering tax rates will create economic growth for Iowa’s economy by making our state more competitive.

ITR President Chris Ingstad said, “ITR believes federal deductibility serves as a protection for Iowa taxpayers. We have long supported federal deductibility, and believe a discussion about its merits is worth having and want to ensure all Iowans receive income tax relief in the process.”

ITR supports a full review of all existing tax credits, including the relevance, duration, intent, and effectiveness, to ensure they are serving Iowa taxpayers.

President Ronald Reagan argued that the only special interest that should be protected by the tax code is the taxpayers. This is a principle that Iowans for Tax Relief will continue to fight for during the upcoming legislative session. Iowa needs economic growth and the best way to create economic growth is by decreasing government spending, lowering tax rates for all, and reducing the regulatory burden.

As we approach the start of the legislative session it is encouraging to hear that tax reform is at the top of the agenda for many legislative leaders. This is especially true after President Trump signed the Tax Cuts and Jobs Act that will help allow Iowa policymakers to enact meaningful tax reform. Iowa’s tax code is both high and complex; our individual and corporate income tax rates are some of the highest in the nation. Iowa taxpayers are long overdue for fundamental tax reform that will provide relief for all taxpayers.

In formulating tax policy, the legislature should make sure that any tax policy is fair, that is, the tax code should not favor one group of taxpayers at the expense of another and it should make Iowa more competitive. The tax code should encourage economic growth and lower rates will allow for greater economic incentive and competitiveness. Iowa is not only in competition with a global economy but also with other states. Some of Iowa’s competitors such as Michigan, Indiana, and Wisconsin are enacting meaningful tax reforms that are creating economic growth within their respective states.

The legislature should also keep in mind that taxes need to be limited and that taxes are to be used only to finance the essential functions of state government. It is immoral for government to believe it has an unlimited claim to the hard-earned income of individuals and businesses. Iowa’s tax code, and all other aspects of government, should have the goal to promote and protect freedom. The tax code should not be used for social engineering. Recent arguments regarding levying a tax on sugary drinks and raising the tobacco tax should be opposed. Advocates of these tax increases argue that it is in the interest of obtaining revenues to fight obesity and other health concerns, but the question must be asked how successful government can be in changing behavior? Can the state make someone lose weight or quit smoking by increasing a regressive sales tax on people?

Taxes must also be transparent. The legislature should review all existing tax credits, including the relevance, duration, intent, and effectiveness, to ensure they are serving Iowa taxpayers. Iowa has numerous tax credits and taxpayers deserve to know these credits are working in their interest. Once again, a more competitive tax code with lower rates will allow less reliance upon tax credits by making Iowa more economically competitive.

Perhaps the most difficult task for the legislature will be the budget. Iowa continues to suffer from a tight budget situation caused by lower than expected revenues. As the legislature considers the budget for fiscal year 2018-2019 it needs to prioritize spending on the necessities of state government. The legislature must start to address spending and the best plan of action is to support the general fund expenditure limitation amendment. This amendment (SJR 9), which passed the Senate last session, would strengthen the 99 percent spending limit already in Iowa’s code. The proposed constitutional amendment would limit the state’s annual spending to the lower of 99 percent of estimated revenue or a four percent increase from the prior year. A fiscal analysis conducted by the Legislative Services Agency found Iowa would have spent $488 million less since fiscal year 2012 if this amendment had been in the state Constitution.

The principles of lower tax rates, spending, and regulation are proven to work. States across the nation that have lowered tax rates and kept spending in control are seeing progress in economic growth and opportunity. Iowa has a historic opportunity to enact meaningful tax relief that will allow Iowans to keep more of their hard-earned income and allow for greater opportunities and growth for the state.

Michael Tanner, a Senior Fellow at the Cato Institute, recently wrote, “regardless of where one falls on the political spectrum, one should expect two things from government: basic competence and a healthy respect for the taxpayers’ money.” This is what Iowans for Tax Relief will be fighting for this legislative session and for years to come.

Iowans for Tax Relief represents taxpayers from across Iowa. We know the best way to create economic growth is by decreasing government spending, lowering tax rates for all, and reducing the regulatory burden. During the 2018 legislative session we will focus our efforts on the following priorities:

No Tax Increases

ITR believes that any opportunity to reform the current tax code and reduce the tax burden should include the following principles:

Fair: Iowa’s tax code should not favor one group of taxpayers at the expense of another.

Competitive: Iowa should have lower tax rates to make Iowa more competitive with our neighbors. The Iowa tax code should encourage, rather than hinder, economic growth.

Transparent: The Iowa tax code is complex and needs to be simplified. Taxpayers in Iowa deserve transparency and accountability when it comes to tax credits and incentives.

Limited: Taxes should only be collected to finance the essential functions of state government. It is immoral for government to believe it has an unlimited claim to the hard-earned income of individuals and businesses.

Protective of Freedom: Iowa’s tax code should promote freedom and should not be used for social engineering. Iowa shouldn’t create new taxes or substitute one tax for another.

ITR supports permanent taxpayer protection in the form of a constitutional amendment to stop state government from spending more than it takes in. The Iowa code currently limits spending to 99% of the projected revenues, but this is a weak spending limitation law and spending has exceeded the limit many times.

During the 2017 session, the Iowa Senate passed SJR 9 with a 38-10 vote. This measure would limit the annual increase in spending from year to year to the lesser of 99% of estimated revenue, or 104% of the prior year’s revenue. A fiscal analysis by the LSA found Iowa would have spent $488.2 million less since FY 2012 if the expenditure limitations of SJR 9 had been in place.

State spending is a major area concern of many in Iowa, especially as our government continues to demand more taxpayer dollars. As we travel the state and listen to taxpayers, the question we are most frequently asked is, “How can we make the state stop spending so much money?” One answer to that question is to pass a proposed Constitutional Amendment that would do just that.

Iowa code currently limits the legislature to spending a maximum of 99 percent of projected revenue in a fiscal year. But this is a weak spending limitation law and one that can always be cast aside by a future legislature. A stronger spending limitation that is written into the Iowa Constitution, where it could only be removed by a vote of the people, would be much more effective.

During the 2017 legislative session, the Iowa Senate passed Joint Resolution 9, which is a constitutional amendment that would strengthen the 99% spending limitation. The measure would “limit the annual increase in spending from year to year to the lesser of 99 percent of the estimated revenue for that fiscal year, or 4 percent above the prior year’s revenue.” The fiscal analysis of Joint Resolution 9 by the Legislative Services Agency (LSA) applied the rules of the resolution to the past ten legislative sessions and they found that “appropriations would have been lower than the enacted appropriations in seven of the fiscal years.”

State Senator Charles Schneider wrote that the LSA analysis “shows that if the spending limit had been in place since fiscal year 2012, state government could have spent $488.2 million less than it has.” The impact of this would have been substantial, especially with Iowa’s current tight budget. “Going into fiscal year 2017, we could have had a carryover surplus of at least $442.8 million. Had that been the case, we would not have had to deappropriate funds for fiscal year 2017, and we would not have to dip into the cash reserve fund to fill the remaining budget gap for this fiscal year,” stated Senator Schneider.

Currently 15 states have a spending limitation requirement written into their constitutions. Although spending limitations can vary upon their strength and design, they provide both a protection for taxpayers and sound fiscal policy by keeping spending in check. Constitutional scholar Rob Natelson wrote that “history teaches that politicians seldom control spending unless the constitution that regulates their conduct requires them to do so and the courts choose to enforce the constitution.” This problem is clearly seen at federal level with the uncontrollable spending that has resulted in a $20 trillion national debt.

Taxpayers deserve stronger protections against the unquenchable appetite for government spending. Families and businesses across Iowa often have to make difficult budget decisions on a regular basis. Seldom does government, at any level, say that they can function with less; it must always be more and more funding. President Ronald Reagan was correct when he stated that government never voluntarily reduces itself in size or function.

If policymakers are able to keep spending restrained, this will also provide an opportunity for Iowa to begin lowering tax rates. Lower spending and lower tax rates is a formula that will allow Iowa’s economy to grow and at the same time being respectful toward taxpayers’ dollars.

Iowa taxpayers deserve additional protections and the best way to do this is add a strong spending limitation to the Iowa Constitution.

Tax reform will be one of the headline-grabbing issues the Iowa legislature will consider when the 2018 session begins in January. Iowa’s tax code is outdated, complex, and it is not taxpayer friendly for the individual or business. Part of the complexity of Iowa’s tax code is the numerous tax credits and incentives offered to individuals and businesses in our state. Iowa’s tax credits are utilized for a variety of purposes from helping households with lower incomes to offering incentives for job creation. This spring The Des Moines Registerreported the “value of tax credits in Iowa has ballooned by 180 percent since 2005, from $153 million to an expected $427 million in 2018.”

One concern with the hundreds of millions of dollars of tax credits is the Iowa Department of Revenue cannot definitively conclude if each of the credits is helping Iowa compete. Nor can the state determine if each credit is having the impact it is intended to. A review of all existing tax credits, including the relevance, duration, intent, and effectiveness is needed to ensure they are serving the taxpayers of Iowa well. Ineffective credits should be reigned-in and offset by lower rates for all.

Tax credits and incentives help alleviate the burdens of taxes Iowans bear under the highest corporate tax rate in the country and the second highest personal tax rate in the Midwest. Tax credits and incentives are also used as tools for economic development. As Debi Durham, who works to recruit new employers to Iowa in her role as Director of Iowa Economic Development Authority, said of our state’s high tax rates during the Iowa Taxpayers Association Annual Tax Symposium, “We need to not be an outlier.”

Iowa’s Department of Revenue reports on tax credits to the legislature’s Tax Expenditure Committee. This legislative committee is tasked with reviewing and evaluating Iowa’s various tax credit programs based upon the Department of Revenue reports. Although these credits are reviewed on a rotating five-year basis, there is substantial concern more accountability and evaluation is needed to make sure these credits and incentives are actually worth the cost. In the non-partisan Tax Foundation’s studyIowa Tax Reform Options: Building a Tax System for the 21st Century, they observed that the Department of Revenue “in its rolling studies of tax credit efficacy, casts doubt on the ability of many of Iowa’s tax incentives to yield the intended economic results.”

Pew Charitable Trusts, a non-partisan research organization, evaluated Iowa’s tax credit system and found Iowa is “leading” other states in terms of evaluating tax credits, but there is room for improvement. Pew’s evaluation found “that for all their analytical rigor, [Iowa Department of] Revenue’s studies do not typically include clear conclusions on how to improve incentive programs; like other state tax-collecting agencies around the country, Revenue’s staff does not typically make policy recommendations.”

Beneficiaries of Iowa’s tax credits fiercely defend them as necessary, especially regarding business growth and economic development. Nevertheless, Iowa’s tight budget situation caused by lower than expected revenues has resulted in a bi-partisan call for a review of all of Iowa’s credits and incentives. Regardless of state revenues, Iowa’s taxpayers always deserve clarity on a $400 million issue.

This reliance on tax credits reflects the need to reform the Iowa tax code. Rather than depending solely on tax credits and incentives for economic growth, business expansion, and balancing household budgets, the Iowa tax code should be reformed to allow for across-the-board lower rates that would provide actual tax relief for all. The Tax Foundation noted “a well-structured tax code with a broad base and lower rates would be far superior in inducing job creation and economic growth.”

Indiana, Michigan, and Wisconsin are some of Iowa’s major competitors in the Midwest and all three states have made significant progress in reforming their respective tax code by lowering taxes and as a result they are seeing economic growth. Every state, including Iowa, will likely continue to utilize tax credits and incentives, but taxpayers deserve greater accountability. If the legislature works to make the tax code friendlier to individuals and businesses by lowering rates, it will result in not only better incentives for economic growth, but it will be protecting the interests of the taxpayer.

“The Tax Cuts and Jobs Act passed by Congress finally brings meaningful tax relief to Iowans after 30 years of empty promises. Middle-class Iowa families will now be able to keep more of their hard-earned paychecks and Iowa businesses will be more competitive in a global economy.

Tax relief, limited government spending, and a competitive business environment drive economic growth. These principles ensure a strong economy and lead to higher wages and investments.

We look forward to working with Iowa leaders to achieve similar reform in our own state.”

Iowans for Tax Relief (ITR) knows the best way to create economic growth is by decreasing government spending, lowering tax rates for all, and reducing the regulatory burden. This is the economic blueprint that will serve the interests of the taxpayers while creating a better Iowa. David Stanley, ITR founder and a long-time Iowa legislator, often said,

“It is easier for politicians to yield to the noisy special interest groups when the taxpayer keeps quietly paying the bills.”

Whether at the Capitol or across the state, we advocate for a real reduction in the tax burden on households and businesses in Iowa. But what principles should Iowa’s tax code adhere to?

ITR believes that taxes in Iowa should be:

Fair: Iowa’s tax code should be fair and not favor one group of taxpayers at the expense of another.

Competitive: Iowa should have lower tax rates rather than the current high tax rates that make our state less competitive with our neighbors. The Iowa tax code should encourage, rather than hinder, economic growth.

Transparent: The Iowa tax code is complex and needs to be simplified. A tax structure that is simpler and easier to understand will be friendlier to taxpayers. Taxpayers in Iowa deserve transparency and accountability when it comes to tax credits and incentives, too.

Limited: Iowa’s tax code should be limited, that is, taxes should only be collected to finance the essential functions of state government. It is immoral for government to believe that they have an unlimited claim to the hard-earned income of individuals and businesses.

Protective of Freedom: Iowa’s tax code should promote freedom. Taxes should not be used for social engineering. Iowa should not create new taxes or substitute one tax for another.

A tax code that follows these principles while reducing the tax burden on Iowans will allow everyone to keep more of their hard-earned dollars. This will encourage economic growth and boost additional investment, ultimately providing more revenue to address the priorities of state government.

Ideas have consequences and the same is true for elections. Elections have consequences because elected officials decide how to spend your hard-earned income collected through taxation.

Local governments set their property tax rates and cities are the largest or second largest consumers of property tax dollars for most Iowans. It is important for taxpayers to keep a watchful eye on their elected officials to make sure property tax dollars are being spent in a responsible fashion.

On Tuesday, November 7, 2017, voters across Iowa will be voting in city elections. Iowans for Tax Relief encourages you to study the issues and candidates, ask the tough questions, and support the best candidate who will protect your interests as a taxpayer.

Property taxes are used to fund a majority of local government services and are one of the most despised taxes because it directly taxes personal property. It doesn’t matter if the tax is collected by a bank along with a mortgage payment, paid online, or from a person’s checkbook, property taxes serve as a reminder why local elections matter.

Local elections tend to have low voter participation, which is unfortunate because of the many important decisions that local governments make on behalf of their constituents. One of the most significant is spending your tax dollars wisely.

Political philosopher Russell Kirk argued, “Ignorance is a luxury none of us can afford.” Because ideas and elections have consequences, it is our responsibility as citizens to not only be informed about the issues and candidates but also exercise our most important political right, voting.

In the end, civic ignorance is a dangerous luxury none of us can afford. Get out there and VOTE!

]]>http://www.taxrelief.org/11-01-17/feed/0Iowa Needs a Pro-Growth Formulahttp://www.taxrelief.org/pro-growth/
http://www.taxrelief.org/pro-growth/#respondFri, 27 Oct 2017 14:20:08 +0000http://www.taxrelief.org/?p=836Continue reading "Iowa Needs a Pro-Growth Formula"]]>Iowa’s tight budget has raised much discussion about what fiscal policies the Legislature should consider to alleviate this situation. Debate has included reviewing Iowa’s numerous tax credits, re-evaluating the property tax backfill obligations, and considering general spending and tax reform. Some have even seemingly ignored the tight budget to argue for more spending and claim that programs such as education and health and human services need to be more “fully funded.” Ultimately what Iowa needs is a pro-growth fiscal policy that will both further grow the economy and create additional opportunities for all Iowans.

The Tax Foundation recently released their 2018 State Business Tax Climate Index and once again Iowa is ranked 40th out of the 50 states in terms of our tax climate. Iowa’s low ranking is attributed to our high tax structure considering the income, corporate, sales, and property taxes, among other costs that impact business and economic growth. Iowa’s overall economy is in relatively good shape with unemployment at 3.2 percent, but the agricultural economy continues to face pressure, which is a major contributing factor to the lower than expected revenues.

Perhaps the best remedy to increasing economic growth in Iowa is to work toward tax reform and relief. In an increasingly competitive market, businesses and entrepreneurs are forcing states to compete with one another in terms of their tax and regulatory climates. It should be noted that while other factors such as workforce quality have a role in attracting businesses, the overall tax climate of a state has a tremendous impact. Economists Arthur Laffer and Stephen Moore recently wrote that “competition is becoming more intense as businesses become more mobile.”

Both Laffer and Moore have studied the economic impact of states that have lower tax rates and levels of regulation versus states that have high tax rates and high levels of regulation. “We have 10 and 20 and 30 years of statistical evidence that low tax and lighter regulation states have been growing a lot faster than those that try to tax and regulate their way to prosperity,” wrote Laffer and Moore.

States such as Wisconsin, Indiana, and North Carolina have all been working toward substantial tax reform in recent years. Other states such as Utah, Texas, and Florida have been growing because of sound fiscal policies. Indiana State Senator Brandt Hershman, who helped lead the efforts to lower tax rates in Indiana, wrote, “While Indiana lowered business taxes by nearly 50 percent, our neighbors in Illinois increased them. The predictable result – as of 2017 more than 50 companies have relocated operations from Illinois to Indiana, bringing jobs and enhancing our state tax revenue so that we can invest in improving our roads, schools, and other priorities. Indiana’s unemployment rate remains among the lowest in the Midwest, below the national average, and a dramatic 1.5 percent lower than Illinois. Hoosiers’ personal income growth is strong, our budget is balanced, our credit is rated AAA, and we have a rainy-day fund reserve that approaches $2 billion.”

North Carolina is another example of a state that lowered both taxes and spending. In fact, North Carolina was confronted with a $3 billion budget gap and in response, the Legislature decided to resolve the budget crisis not with tax increases, but by reducing spending and lowering taxes. North Carolina also provided an economics lesson that other states, and especially the federal government, need to follow. The tax cuts initiated by the North Carolina Legislature were prudent, that is, they made sure to keep spending under control to avoid deficits. This is an important lesson for all policymakers to learn.

This will be a challenge for the Iowa Legislature as they consider tax relief in the next legislative session. The recent October Revenue Estimating Conference projected further tight revenues. Although Iowa’s revenues are not declining, the lower than expected revenue growth creates a problem for legislators.

Liberal politicians and progressive voices in Iowa are arguing that state government cannot afford any additional “austerity” style cuts to government and policymakers must address the over-generous tax credits to large corporations. From the opposite side, conservatives are arguing that tax reform is a priority and the Legislature must address spending.

Just as with North Carolina, any tax relief in Iowa must be addressed in coordination with spending controls to avoid deficits. Iowa, which has both high individual income taxes and the highest state corporate tax rate, must start the process of working toward lowering tax rates across-the-board. Advancing towards lower rates will mean that the Legislature will have to consider more prudent spending and evaluate the entire menu of current tax credits. This is what is occurring in Indiana. “As Indiana lowered rates, we have also reduced or eliminated many tax incentives, allowing our flat rates to be our strongest selling point,” stated Senator Hershman.

If Iowa can achieve lower tax rates over time, the need for so many tax incentives will be reduced. States will likely never be able to get away from all forms of tax incentives, though; even states with low tax rates will still compete to win deals. But those lower rates that will make Iowa more competitive will mean the government can stop picking winners and losers so often.

Lower tax rates, along with lower levels of spending, will encourage the economic growth Iowa needs, and ultimately provide more revenue to address the priorities of state government. Senator Hershman argues that “Indiana’s experience suggests cleaning up the code, eliminating excessive breaks and loopholes, and using savings to dramatically lower rates is a winning formula.”

Some local governments are now collecting more property tax dollars than they were prior to property tax reform, even without the state’s backfill. This is an opportunity for state and local government to consider the state’s role in property taxes.

Policymakers in Iowa should be cautious not to jump on the soda tax bandwagon. A soda tax does not guarantee additional revenues and it will most likely not produce the intended moral outcome of reducing obesity.

One of the most overlooked and least participated in elections could have a huge impact on your taxes. School board elections will be next Tuesday, September 12. Polls are open from 7:00 a.m. to 8:00 p.m.

Property tax bills keep going up and many Iowans don’t like it and want to know what can be done to slow and stop this runaway tax train. If you review your recent property tax statement, you’ll likely see that your local school district received more of your property tax dollars than anything else. School boards control the spending and revenue needs of the district.

This means the best taxpayer protection is pro-taxpayer candidates winning elections!

Do your homework and vote for candidates who will create a better school for your community as well as slow the growth of taxes and spending. Encourage friends and neighbors to vote as well. Every vote does count!

]]>http://www.taxrelief.org/the-best-taxpayer-protection/feed/0Hendrickson Joins Iowans for Tax Relief Staffhttp://www.taxrelief.org/hendrickson-joins-iowans-for-tax-relief-staff/
http://www.taxrelief.org/hendrickson-joins-iowans-for-tax-relief-staff/#respondTue, 01 Aug 2017 19:21:59 +0000http://www.taxrelief.org/?p=755Continue reading "Hendrickson Joins Iowans for Tax Relief Staff"]]>Iowans for Tax Relief (ITR), Iowa’s leading taxpayer advocacy organization, today announced the addition of John Hendrickson to their staff in the role of Policy Analyst.

Before becoming part of the Iowans for Tax Relief team, Hendrickson served as a Research Analyst with Public Interest Institute, a public policy research group. His articles have been published in many newspapers across Iowa including the Des Moines Register and Cedar Rapids Gazette. Below are links to some of his recent articles:

Prior to joining Public Interest Institute Hendrickson also worked as a political reporter and as a researcher for the Heritage Foundation. Hendrickson earned both his BA and MA degrees in History from the University of North Dakota. He specializes in American political and constitutional history.

ITR President Chris Ingstad said, “John’s ability to understand complex fiscal issues and clearly communicate solutions will help ITR educate and inform Iowans on the pro-growth benefits of decreased spending and lower taxes. Our neighbors in Illinois are living proof that bad policy in state government leads to tax increases. ITR is fortunate to add John’s experience in examining state fiscal policy to our team.”

Iowans for Tax Relief works to limit total government spending and total taxes for the benefit of all Iowa taxpayers. ITR was established 1978 and is one of the largest taxpayer protection organizations in the country.

]]>http://www.taxrelief.org/hendrickson-joins-iowans-for-tax-relief-staff/feed/0Increasing Revenue Doesn’t Keep Pace with Iowa’s Spending Problemhttp://www.taxrelief.org/watchdog_07-13-17/
http://www.taxrelief.org/watchdog_07-13-17/#respondThu, 13 Jul 2017 13:41:08 +0000http://www.taxrelief.org/?p=714Continue reading "Increasing Revenue Doesn’t Keep Pace with Iowa’s Spending Problem"]]>For the third time in seven months, Iowa is looking its spending problem right in the eye despite the fact total gross tax receipts have increased $135.4 million for Fiscal Year 2017. Even after collecting considerably more of your tax dollars than the previous year, the State’s budget saw $350 million worth of adjustments as the last half of the fiscal year wound to a close.

The 2017 legislative session had to deal with a spending problem created by the 2016 legislative session. During that session, the Iowa Senate was controlled by Democrats and the Iowa House by Republicans. The budget they passed for FY2017 and Governor Branstad signed, was a product of compromise that spent right up to the maximum allowed based on the Iowa Revenue Estimating Conference’s (REC) overly-optimistic revenue estimate. When a revised revenue estimate was released in December 2016, legislators were forced to make $118 million in cuts to state expenses. After another lower estimate this March, Iowa transferred $131 million from the state emergency reserve funds. And when FY2017 ended on June 30, spending was still $104 million more than received revenue. This most recent shortfall must be covered by borrowing from the emergency reserve funds once more.

The chart below shows how much, in dollars, state tax receipts grew or declined in each year.

Of the $135.4 million increase in tax receipts, a large portion of the increase came directly from personal income taxes paid by Iowans. According to a report from the Legislative Services Agency, major sources of revenue and their contributions to the FY 2017 year-to-date revenue change include:

Personal income tax (positive $113.5 million, 2.6%)

Sales/use tax (positive $1.6 million, 0.1%)

Corporate tax (positive $29.2 million, 5.6%)

Other taxes (negative $9.0 million, -3.2%)

Other receipts (positive $13.2 million, 4.4%)

Tax refunds not including school infrastructure refunds (negative $59.4 million)

School infrastructure sales/use tax refunds (negative $3.8 million)

Many news articles quote high-spending legislators placing the blame on too many tax credits. It is wrong to assume the state gave away too many of Iowans’ dollars when the state actually took more from Iowa taxpayers than ever before! There are two parts to the budget creation process: dollars received, and dollars spent. Regardless of the structure of the current tax system, revenues still increased! And as we have witnessed over the past year, it is difficult to accurately estimate the total amount of dollars that the citizens and businesses of Iowa will ultimately owe and pay to the state. The spending of those dollars, however, is another story. While the 2017 legislative session produced a state budget that appears to be more fiscally responsible for FY2018, the ramifications from FY2017’s over-spending continue to linger.

There are many reasons Iowa’s income tax system should be reformed, including a need for simplification and predictability. Generating more revenue is not one of those reasons, though. In fact, those tax credits that are bemoaned by some are needed because Iowa’s tax system is too complex and its rates are too high. If we remove the credits received by some, we need reform to reduce rates for all.

]]>http://www.taxrelief.org/watchdog_07-13-17/feed/0Do Not Let Kansas or Liberals Scare You Away From Tax Reform – Public Interest Institutehttp://www.taxrelief.org/pii_07-2017/
http://www.taxrelief.org/pii_07-2017/#respondThu, 06 Jul 2017 14:27:10 +0000http://www.taxrelief.org/?p=1038Continue reading "Do Not Let Kansas or Liberals Scare You Away From Tax Reform – Public Interest Institute"]]>The question must be asked whether the Kansas story is a failure in conservative/supply-side economics, as the liberals claim, or a failure on the part of the Legislature to control spending. The answer is that the Kansas tax cuts are sound policy, but since the Legislature did not control spending the result was a budget deficit. Tax reductions are fiscal policy tools for creating not only economic growth, but also additional revenues. States such as Utah, North Carolina, and Wisconsin are seeing more economic growth because of lower tax rates. Kansas even has a low unemployment rate, which provides further evidence that the state has a spending problem.

Read more: http://www.limitedgovernment.org/brief24-20.html

]]>http://www.taxrelief.org/pii_07-2017/feed/0Local Property Tax Revenue Varies Greatly Across the Statehttp://www.taxrelief.org/local-property-tax-revenue-varies-greatly-across-the-state/
http://www.taxrelief.org/local-property-tax-revenue-varies-greatly-across-the-state/#respondMon, 26 Jun 2017 18:12:30 +0000http://www.taxrelief.org/?p=686Continue reading "Local Property Tax Revenue Varies Greatly Across the State"]]>Property taxation is the closest most of us come to a double-edged sword. None of us like to pay more taxes, but many times, higher taxes are due to the fact the property we own is, in fact, worth more.

A few months ago property owners across Iowa received their new property tax bills and many were surprised at the increased assessment and angered by the effect on their taxes. Most County Assessors try to make assessments as accurate as possible by making good use of available market data. But for Iowans, the assessed value is only half of the property tax equation. After the value of a property has been set, the property tax rates in each county are calculated in a multi-step process that includes budget submissions from each taxing authority including K-12 schools, cities, counties, and hospitals. Once the budgets are submitted, the County Auditor sets the tax rate by dividing the total amount of the budget by the taxable value of all the property in the taxing district. That rate is expressed as dollars per thousand of valuation.

Cities are one of the larger taxing authorities and the rates levied by them have a large variation across the state. A recent excellent publication written by Gretchen Tegler of the Taxpayers Association of Central Iowa (TACI) ranked 16 central Iowa cities by their percent increase in property tax revenue from FY 2017 to FY 2018. Ms. Tegler’s report highlights two extreme and opposite examples in the cities of Waukee and Des Moines. Even though the city of Waukee has kept its tax rate constant for 18 years, the city will have a 19.5% increase in property tax revenue due to increased valuations and new properties coming onto the tax rolls. Des Moines, on the other hand, will have to raise the property tax rate just to realize a revenue increase of 2.7%. Iowa property taxes are complicated and they can be difficult to understand because of multiple taxing authorities, games that can be played between valuations and rates, changing populations, inflationary pressure, and the list goes on.

Iowans for Tax Relief appreciates the good work of Taxpayers Association of Central Iowa and would like to share this same information for more communities statewide. The tables below detail tax rates for FY 2017 and 2018, and the percent change in taxable valuation, property tax revenue, and population for the 16 cities of the Des Moines metro area (Table 1, courtesy of TACI), the 20 largest cities outside of the Des Moines area (Table 2), and four counties from across the state (Table 3).

If your city or county is not included in the data provided in these tables, email us at ITR@taxrelief.org and we will provide you with your local data.

It is always the right time to contact officials at all levels of government to make sure they are looking out for the interests of the taxpayer. Cities and counties that are fortunate enough to benefit from a growing population or an increase in taxable valuations have a unique opportunity to reduce the rates they are charging taxpayers. One possible way to ensure this would be enacting legislation at the state level that required automatic rate reductions in tax levy rates to partially offset increases in assessed values so that net property tax dollar increases would be limited.

]]>http://www.taxrelief.org/tef_06-01-17/feed/0Iowa Taxpayers Deserve Constitutional Protectionhttp://www.taxrelief.org/pii_05-2017/
http://www.taxrelief.org/pii_05-2017/#respondFri, 05 May 2017 16:30:32 +0000http://www.taxrelief.org/?p=1040Continue reading "Iowa Taxpayers Deserve Constitutional Protection"]]>Iowa Code dictates that the Legislature can only spend up to 99 percent of the projected revenue. The Iowa Senate has already passed a constitutional amendment to place the 99 percent spending limitation into the Iowa State Constitution, but the House has yet to act. As Iowa Legislators struggle with making difficult decisions to fund numerous government programs, there will be pressure to raise tax rates in an attempt to bring in extra revenue. This would not just be a policy mistake; it would harm Iowa’s economy. Therefore, the Legislature should consider a state constitutional amendment to require a supermajority vote of the Legislature in order to raise taxes. This would provide the taxpayers of Iowa with protections against excessive taxation.

Read more: http://www.limitedgovernment.org/brief24-14.html

]]>http://www.taxrelief.org/pii_05-2017/feed/0Smaller and Smarter – Did It Happen?http://www.taxrelief.org/watchdog_04-28-17/
http://www.taxrelief.org/watchdog_04-28-17/#respondFri, 28 Apr 2017 15:25:06 +0000http://www.taxrelief.org/?p=553Continue reading "Smaller and Smarter – Did It Happen?"]]>Entering the legislative session the theme was to “make government smaller and smarter.” After four months, did our elected officials accomplish that goal? Many bills approved by legislators and signed by the Governor will empower taxpayers and hopefully reign in spending. Others fell short and leave taxpayers unprotected.

Here is an overview of the session’s impact on Iowa taxpayers:

Next year’s budget – SMALLER & SMARTER

Lower than expected revenue estimates forced cuts to many budget areas and spending money from the state’s “rainy-day” funds to balance the fiscal year 2017 budget ending June 30. To hopefully avoid mid-year adjustments next year, the fiscal year 2018 budget is $14 million less than FY 2017.

Senator Charles Schneider said, “We are taking the same approach to the state budget as he or she takes with their family budget. When times are lean, when they don’t see as much revenue as they expected, they find themselves having to dig into their savings account.”

The collective bargaining reform approved this session will provide a system that’s able to provide cost savings without having to cut jobs or services for school districts and city, county, or state government. It will bring a balance back to the negotiation process. It is a better deal for taxpayers and an opportunity for our hard-working public employees to be rewarded.

The reform will:

End the practice of state government payroll systems collecting union dues. Iowa taxpayers had been footing the bill for collecting union membership dues. Union dues are used to influence legislative activity.

Require bargaining units to hold re-certifications elections for all employees in the calendar year prior to negotiations. Most government unions in Iowa have not had a re-certification vote in over 40 years.

Prohibit an arbitrator from considering previous bargaining agreements and the consideration of the government’s ability to raise taxes in order to pay for employee benefits. Previously, arbitrators could consider the power of the state “to levy taxes and appropriate funds for the conduct of its operations.”

Contrary to what anti-reform legislators said on the floor during the debate in the House and Senate, this will NOT:

Ending the government mandate of project labor agreements (PLAs) will protect taxpayers and non-union construction workers. This will give a vast majority of contractors a fair playing field when bidding on government projects. The Association of Builders and Contractors says that PLAs discourage competition which results in the bid price increasing. This drives up construction costs by as much as 18%. As a result of PLAs, taxpayers can end up paying more.

Jeremy Price, owner of Price Industrial Electric said in a Cedar Rapids Gazette guest column, “In my opinion, the worst component of a PLA is the requirement for a contractor to hire its workforce through a labor union. If I were to bid on such a project, the fact that I would not be able to put my own employees to work is wrong. My employees live here, pay taxes here, and are active in our community. They should not be kept from working on public projects simply because they have voluntarily made the choice not to belong to a union.”

Iowa law currently limits spending to 99% of the revenue estimate. However, legislators have created holes in the law and at times have spent over the limit. The best solution to this problem is a constitutional amendment that would offer permanent protection. A proposed amendment limiting spending to 99% of the estimated revenue or 104% of the current fiscal year net revenue received bi-partisan support when approved by the Iowa Senate. The Iowa House did not act upon the resolution.

This resolution will probably be introduced again next year. Iowans for Tax Relief will keep you informed and let you know when to contact legislators to encourage approval.

Ending coupling with federal tax code – BIGGER & DUMBER

The long-standing taxpayer protection of coupling fell victim to past overspending by Iowa’s legislature. Iowa’s income tax code will no longer match or “couple” with many federal deductions when filing state income taxes for the 2016 tax year. Some legislators have indicated they would like to make coupling permanent in next year’s legislative session beginning with the 2017 tax year. If not, this is SIMPLY A TAX INCREASE!

Coupling is not just a tax protection; by not coupling Iowa has just made tax filing more complicated, too. In January, Joe Kristan, a CPA at Roth & Company, PC, Des Moines, Iowa, said in an online post, “We didn’t expect Sec. 179 coupling, but wholesale non-coupling is a new and unwelcome twist. So this tax season will be awful in Iowa”.

What’s Next?

Leaders in the House and Senate along with soon-to-be Governor Kim Reynolds have all indicated tax reform is on the top of their agenda for next year. Iowa Senate Republicans have released a few details of their tax reform plan. Senator Randy Feenstra, chairman of the Ways and Means committee, told Rod Boshart of the Cedar Rapids Gazette, “We believe that how you grow the economy is to lower rates. Once you lower rates, that should drive the economy, injecting more revenue coming into the state.”

Iowans for Tax Relief will study and research the impact this new plan has on taxes owed by Iowans across all income levels. We will also reach out to our members by phone, email, and postal mail. Their input on tax and spending issues will help us develop our member-driven tax policy as we prepare for the 2018 legislative session.

]]>http://www.taxrelief.org/watchdog_04-28-17/feed/0Protect Your Family Budget From the State Budgethttp://www.taxrelief.org/watchdog_04-21-17/
http://www.taxrelief.org/watchdog_04-21-17/#respondFri, 21 Apr 2017 16:14:46 +0000http://www.taxrelief.org/?p=542Continue reading "Protect Your Family Budget From the State Budget"]]>This year’s legislative session has provided some major taxpayer victories and will soon wrap up. The focus will turn to next year and the opportunity for tax reform.

Last week Iowa Senate Republicans released details of an income tax reform plan but said they would wait until next year’s legislative session to pursue the changes. There plan would:

Reduce the number of tax brackets from nine to three

Lower the top rate from 8.98% to 5.65%

Phase out federal deductibility

Increase amount of pension income that is tax exempt

Eliminate the alternative minimum tax

Slow the growth of tax credits

Provide $500 million in tax relief by 2022

In an interview with Rod Boshart of the Cedar Rapids Gazette, Senator Randy Feenstra, chairman of the Ways and Means committee, said, “We believe that how you grow the economy is to lower rates. Once you lower rates, that should drive the economy, injecting more revenue coming into the state.”

Iowans for Tax Relief has long supported the ability of Iowa taxpayers to deduct all federal income tax payments on their Iowa income tax returns. Over the years there have been many attempts to remove federal deductibility combined with other adjustments to the income tax model. Some income tax reform plans have attempted to be revenue neutral, although they would shift the distribution of the tax burden. On paper, such a proposal can look inviting. However, in practice, removing the key taxpayer protection of federal deductibility could lead to higher income taxes. Iowans for Tax Relief will study and research the impact this new plan has on taxes owed by Iowans across all income levels.

Lowering tax rates along with reduced spending will provide numerous benefits for the state. John Hendrickson of the Public Interest Institue wrote in a recent publication, “In fact states that have perused tax and spending reform have not only made improvements in economic growth, but it also has allowed for additional support to vital state programs such as education.”

However, these improvements could be short-lived if permanent protections are not in place to prevent future legislators from simply raising tax rates. Hendrickson went on to write, “Taxpayers in Iowa deserve more constitutional protection from excessive taxation and a constitutional amendment requiring a super-majority vote of the legislature to increase taxes would be an additional protection for taxpayers.”

Yes, Iowans do deserve permanent protection! Iowans for Tax Relief has long supported two constitutional amendments to control spending and taxes:

Limit spending. Iowa law currently limits spending to 99% of the revenue estimate. However, legislators have created holes in the law and at times have spent over the limit. The best solution to this problem is a constitutional amendment that would offer permanent protection. A proposed amendment limiting spending to 99% of the estimated revenue or 104% of the current fiscal year net revenue received bi-partisan support when approved by the Iowa Senate. The Iowa House has not acted upon the resolution.

Limit tax increases. An amendment to Iowa’s constitution that requires the votes of 60% of all members of both Houses of the Iowa legislature to pass any new state tax or any increase in the state income tax, sales tax, or use tax, would prevent most tax increases and protect your family budget. Making it harder for politicians to raise your taxes is a common-sense protection.

These two amendments would place responsible limits on government and provide flexibility to handle emergencies. Government growth should be at a slower rate than people’s income. Shrink the government’s share, so you can keep a bigger share of what you earn!

To amend the Iowa Constitution through a legislative initiative, an amendment resolution must receive a simple majority in both the House and Senate from two successive Iowa General Assemblies and then be approved by a majority of Iowa voters. Iowa voters have previously amended our constitution 48 times.

Iowa is fortunate to have many good, pro-taxpayer legislators in Des Moines for another year. Together we can put the state’s budget on a solid foundation and protect family budgets for the future.

What is the best way to find the value of something you own? Property owners across Iowa recently received their new assessed values and many were surprised at the increase and angered by the effect on their taxes.

In Iowa, the value of a residential, commercial, industrial, or agricultural property is estimated by the county Assessor every two years. This “assessed value” is used to calculate the amount of property tax an owner must pay. Assessors do not determine the tax rate, just the value of a property.

After the value of a property has been set, the property tax rates are determined in a multi-step process that includes budget submissions by each taxing authority such as K-12 schools, cities, counties, and hospitals. Once the budgets are submitted, the county Auditor sets tax rate by dividing the total amount of the budget by the taxable value of all the property in the taxing district. That rate is expressed as dollars per thousand of valuation.

The rate is referred to as “dollars per thousand.” For example, if a house was assessed with a value of $90,000 and has a tax rate of $10 per thousand, the tax would be calculated at 90 x $10, or $900 for that taxing authority.

At times, some of these taxing authorities seem to think your house is made of money!

Legislators have quickly proposed changes to level what they see as an uneven playing field between recipients of tax dollars and property owners. In the House, HSB 197 would try to return some power to the taxpayer by:

Switching the burden of proof to the Assessor to prove the valuation is accurate.

Adding taxpayer representatives to the conference board that appoints the Assessor.

Requiring reassessments of all properties within a classification, not just certain areas.

Restricting the use of property tax money to pay for outside counsel during an appeal.

Allowing for the reimbursement of expenses to the property owner when an appeal is successful.

This bill will help ensure values are not inflated to meet budget targets of the recipients of these tax dollars.

Iowa Senate President Jack Whitver noted property taxes are the number one issue he hears about from constituents. He said, “I understand the anger of the Ankeny citizens when they see their elected officials tout property tax decreases, only to see their overall tax bill increase. The reason this happens is because the city and school rates are lowered, but the Assessor increases assessments to more than offset the levy decrease.”

In February, the city of Ankeny where Whitver lives announced it would lower its property tax rate for the fourth year in a row. However, even with the continued rate reductions, property tax bills have increased because of higher assessments. Whitver added, “I am committed to continue to work towards a solution, whether it is capping the amount of increase at inflation, making the assessor an elected official so they are accountable to the people, or requiring a retention vote for county Assessors.”

Property assessments need to be as accurate as possible and it is good to strengthen the rights of taxpayers, but reform is needed. Iowans for Tax Relief has long supported a realistic limit on the percentage increase in the total dollar amount of property taxes on any property in any year. We support the current law that limits the annual percentage increase in the assessed value of all classes of property. However, a limit on the total dollar amount of property taxes would give taxpayers more protection. One possible alternative would be a law requiring automatic reductions in tax levy rates to offset increases in assessed values so the net dollar increase would be limited.

The Iowa legislature is remaining mindful of the Revenue Estimating Committee’s two recent downward projections of state revenue growth. With the memories of this year’s painful de-appropriation process and large dip into the state’s “rainy-day” funds in mind, Republicans who control both the House and Senate released a joint budget target of $7.2457 billion for fiscal year 2018 this week. Though Governor Branstad released his own scaled-back budget target late last month, he quickly agreed to the legislature’s suggestion of an additional $38 million reduction.

Senator Charles Schneider said, “We are taking the same approach to the state budget as he or she takes with their family budget. When times are lean, when they don’t see as much revenue as they expected, they find themselves having to dig into their savings account.”

That is exactly what has happened to Iowa this year. Overly optimistic revenue projections and too much spending led to difficult mid-year de-appropriations and using money from the “rainy-day” funds. Both the Governor’s and Republican legislator’s budget proposals include refilling the $131 million used from Iowa’s cash reserves to cover fiscal year 2017’s overspending.

The joint announcement from Sen. Schneider and Rep. Pat Grassley said, “This budget plan makes additional investments in key priorities like K-12 education and provides resources for essential functions of government.” Still included in the budget is an additional $40.1 million committed to earlier this year for K-12 education. “We don’t want to over-promise as done in the past. We want to make sure that when we set a budget number for education, it’s something that we can keep,” Schneider added.

Their budget targets total $7.2457 billion and are $14 million less than the current fiscal year. In their weekly newsletter, Iowa House Republicans said, “This represents a real reduction in government spending, not a smaller increase.” Below is a comparison between the proposed budget targets for fiscal year 2018 and the current fiscal year 2017 budget:

According to O. Kay Henderson of Radio Iowa, the Governor’s budget director, Dave Roederer, worked with Republican legislators and their plan. Roederer told Radio Iowa “Caution is always going to be the key word.”

It is good for Iowa to use a cautious budgeting approach after receiving multiple inaccurate revenue projections. Too much spending led to difficult decisions and mid-year adjustments to our current budget. A responsible and realistic approach to next year’s spending is wise. Iowans for Tax Relief appreciates legislators fighting for the budgets’ of Iowans and not the budgets of state government.

]]>http://www.taxrelief.org/04-07-17_watchdog/feed/0Tighten the Budget and IPERS is Missing the Targethttp://www.taxrelief.org/03-30-17_watchdog/
http://www.taxrelief.org/03-30-17_watchdog/#respondFri, 31 Mar 2017 21:49:57 +0000http://www.taxrelief.org/?p=457Continue reading "Tighten the Budget and IPERS is Missing the Target"]]>_______________

Time to Reduce Spending and Tighten the Budget

Governor Branstad released a revised fiscal year 2018 budget this week that is 2.3 percent smaller than the budget he proposed in January. His new $7.283 billion budget will fully repay $131.1 million used from the rainy-day fund to balance this year’s budget, maintains K-12 education spending and does not reduce the number of state employees or close state institutions. Compared to his original budget the reductions would affect funding for health and human services, secondary education, and both the judicial and legislative branches.

According to O. Kay Henderson, from Radio Iowa, some legislators would prefer to see an even more cautious approach to spending.

Senator Charles Schneider, a Republican from West Des Moines, leads the senate committee that writes state budget plans. He said with uncertainty about state tax collections, it’s “smart” for legislators to consider cutting more deeply than Branstad recommends — to ensure lawmakers aren’t forced to make another round of budget cuts in early 2018.

“There’s very little margin for error because we’ve spent the surplus down and we’re taking money from the cash reserve fund already,” Schneider told Radio Iowa. “A lot of us are trying to identify ways where we might be able to make some reductions beyond what the governor recommended, just to make sure we don’t have to deappropriate next year.”

Iowans for Tax Relief has said many times, this year’s budget revisions are not the result of decreased revenue. Revenue has continued to grow, just not as much as projected. The problem is too much spending combined with the inability to correctly predict revenue.

“We all understand that there are extreme challenges ahead and actually choppy waters. We just have to figure out how that plays out. It will take reducing programs, maybe even removing programs, and looking at all facets of where revenue comes in and goes out, from tax credits to tax exemptions, to the very programs that affect everyday lives. These are all things that need to be looked at and figured out.”

It is good to hear fiscally sound statements from legislators like Senators Schneider and Feenstra. However, if we are going to remove taxpayer protections in the form of tax credits, tax rates need to be reduced for everyone.

The lower rate of return increases the gap between what is paid to IPERS’ retirees and the amount contributed each year. This shortfall is called an unfunded liability and was $5.6 billion in December 2016. Lowering the assumed rate of return will increase that by $1.3 billion for a total unfunded liability of $6.9 billion and leaves IPERS at only 80% funded.

Because pension payments to retired state employees are guaranteed, Iowa taxpayers will have to open their checkbooks once again to pay additional taxes to make up for this deficit. According to Gretchen Tegeler of Taxpayers Association of Central Iowa, taxpayers are spending about $400 million each year in debt payments to cover the shortfall for Iowa’s two largest public retirement plans, IPERS and Municipal Fire & Police Retirement System of Iowa (MFPRSI). Tegeler says $400 million represents the equivalent of 5,000 (15 percent) fewer teachers in Iowa, higher property taxes, lower credit ratings, and any number of other impacts on government services.

Iowa should be committed to fulfilling commitments with current employees and retirees but we need meaningful pension reform to end this ongoing burden. Retirement plans like IPERS are called defined benefit plans. Monthly benefits paid to retired employees are guaranteed for life even if there has not been enough money set aside to meet all pension obligations. Most private sector businesses offer employees defined contribution retirement plans. Payouts to retirees from these plans are based entirely on what has been contributed and the investment income of the contributions. There isn’t a guaranteed payout when an employee retires so it is impossible to have unfunded liabilities.

Pension reform for Iowa’s state employees is necessary for the state to remain financially stable. IPERS and the other public defined benefit retirement systems are a huge liability for Iowa taxpayers. Let’s take away the bow, the arrows, and the target and have state employees, including legislators, participate in fiscally responsible retirement plans like the rest of us.

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Support Pro-Taxpayer Legislators!

Attend a local forum and let pro-taxpayer legislators know you appreciate efforts to make state government smaller and smarter.

These are not ITR sponsored forums.

Saturday, April 1

Sen. Mark Costello
9:30 a.m.
Red Oak High School

Muscatine Area Legislators
9:00 a.m.
Muscatine Community College

]]>http://www.taxrelief.org/03-30-17_watchdog/feed/0Hindsight is More Accurate Than Foresighthttp://www.taxrelief.org/03-24-17_watchdog/
http://www.taxrelief.org/03-24-17_watchdog/#respondFri, 24 Mar 2017 19:11:37 +0000http://www.taxrelief.org/?p=450Continue reading "Hindsight is More Accurate Than Foresight"]]>We all know it is wise to check your surroundings while driving. Imagine trying to change lanes in heavy traffic without using a rear view mirror or turning your head to check a blind spot. It is impossible to know if the lane is clear only looking forward. Just like driving, creating and reviewing budgets requires looking backward at previous years.

Any time proposed legislation will have an impact of $100,000 during the fiscal year or $500,000 over a five-year period, the Fiscal Services division of Iowa’s Legislative Services Agency is required to issue a Fiscal Note. This report shows the effect on Iowa’s budget if the legislation is enacted.

This week, a fiscal note was released for the spending limitation amendment (SJR 9). The proposed amendment would limit spending to 99% of the estimated revenue or 104% of the current fiscal year net revenue. If this amendment was in place 10 years ago, Iowa would have spent an average of $75.6 million less each year.

Iowa currently has a state statue to limit spending to 99% of projected revenue. This limitation imposed by Section 8.54 only applies to the general fund. Looking back, it is easy to see state lawmakers have created holes in the law and spent $529.3 million too much over the last seven years. This has been done by increasing non-general fund spending or simply adding “notwithstanding” in front of the Code of Iowa section they want to ignore. Spending too much has led to painful budget cuts this year. An amendment would eliminate these holes and impose much needed fiscal discipline.

To amend the Iowa Constitution through a legislative initiative, an amendment resolution must receive a simple majority in both the House and Senate from two successive Iowa General Assemblies and then be approved by a majority of Iowa voters. It has passed in the Senate and approval is expected by the House this year. The next step for this resolution is approval in either of the 2019 or 2020 legislative sessions. It will then have the opportunity to be voted on by all Iowans.

Iowa voters have previously amended our constitution 48 times. Iowans for Tax Relief has a history of supporting amendments that would offer permanent protection for taxpayers. In June 1999, two such amendments were put to a vote of the people. One was a spending limitation amendment which narrowly failed by a 49%-51% margin. The other was an amendment to require any increase in the state income tax, sales tax, or use tax to receive at least 60% approval in the House and Senate. That amendment failed 48%-52%.

The current spending limitation amendment is about to complete step one of three steps. Iowans for Tax Relief will keep you informed of its progress. We cannot afford to let this opportunity slip away again. Encourage your legislators to support the amendment now and in 2018 support candidates that will pass the amendment in 2019 or 2020.

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Support Pro-Taxpayer Legislators!

Last November, your voice was clearly heard when you voted. Now, your legislators need your support again. Pro-taxpayer legislators are being attacked for defending Iowa’s budget.

Attend your forum and let them know you appreciate their efforts to make state government smaller and smarter.

Again, It is a SPENDING Problem!

You might not hear this anyplace else because most of the news reports about Iowa’s lower-than-expected revenue growth have focused on what they say is a decline in state revenue. Take a closer look. Tax receipts have INCREASED 2.7% during the current fiscal year. The real story should be Iowa approved too much spending in 2016.

At the Revenue Estimating Conference announcement Tuesday, Holly Lyons, director of the Legislative Services Agency said, “State revenues are still experiencing growth, just slow growth.” She went on to say, “There continues to be an underlying strength in the economy” A statement supported with the following data:

Iowa is close to full employment with a jobless rate of 3.3% in January. The lowest it has been since August 2001.

Iowa is one of only 11 states with a real gain in GDP of 4.5% or more.

The number of housing and building permits reached its highest level since 2006 and is 25% higher than one year ago.

Sales of existing homes continue to be strong.

The budget problem Iowa is facing today was created last year. Spending right up to the maximum allowed is never wise, especially when the revenue estimate turns out to be overly optimistic.

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What’s the First Rule of Saving Money?

If you want to save money, don’t spend more than you receive. Sounds simple, right? Not always. Anytime elected officials are involved, it is never simple.

Currently, there is an Iowa law limiting spending to 99% of the revenue estimate. However, legislators have made holes in the law and at times have spent over the limit. The best solution to this problem is a constitutional amendment that would offer permanent protection. This week, a proposed amendment limiting spending to 99% of the estimated revenue or 104% of the current fiscal year net revenue has received bi-partisan support. It was approved by the Iowa Senate and is expected to pass in the House.

To amend the Iowa Constitution through a legislative initiative, an amendment resolution must receive a simple majority in both the House and Senate from two successive Iowa General Assemblies and then be approved by a majority of Iowa voters. The next step for this resolution is approval in either of the 2019 or 2020 legislative sessions. It will then have the opportunity to be voted on by all Iowans.

This type of protection for our state’s budget is simply common sense. It is prudent to stop politicians from spending more than the state takes in.

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Support Pro-Taxpayer Legislators!

Last November, your voice was clearly heard when you voted. Now, your legislators need your support again. Pro-taxpayer legislators are being attacked for defending Iowa’s budget.

Attend your forum and let them know you appreciate their efforts to make state government smaller and smarter.

]]>http://www.taxrelief.org/03-17-17_watchdog/feed/0Roads Less Traveledhttp://www.taxrelief.org/roads-less-traveled/
http://www.taxrelief.org/roads-less-traveled/#respondMon, 13 Mar 2017 19:13:09 +0000http://www.taxrelief.org/?p=1005Continue reading "Roads Less Traveled"]]>It is time to stick a fork in some roads and bridges. The Cedar Rapids Gazette recently had a pair of articles about Iowa’s roads and structurally deficient bridges.

Iowa’s 24,242 structurally deficient bridges are the most of any state and third highest in percent of total state bridges according to the American Road & Transportation Builders Association 2016 annual bridge report. Structurally deficient does not mean the bridge will collapse when a school bus or grain truck drives over. It can simply mean the bridge deck is not wide enough to meet current standards.

The 10 cent per gallon increase in the fuel tax increase that passed in 2015 added an estimated $213 million per year to the state road use tax fund. Based on the state’s funding formula of 47.5 percent for the primary road system, 24.5 percent for secondary county roads, 20 percent for city streets, and 8 percent for farm-to-market county roads, the smallest piece of the pie is left to fix structurally deficient bridges. Perhaps Iowa does need to maintain fewer bridges and miles of roads.

In July, 2015, then Iowa Department of Transportation director Paul Trombino said he expected the state’s overbuilt and unsustainable road network to “shrink,” according to Charles Marohn of Strong Towns. Trombino also said Iowans should figure out which roads “we really want to keep” and let the others “deteriorate and go away.”

As with every other part of state government, we need a smaller and smarter transportation system. It either needs to become smaller by having fewer roads and bridges or become smarter by changing the formula to properly fund what we already have.

Picking the Winners

March is an exciting time of the year. Each week brings a new basketball
tournament where upsets and last second shots capture our attention. We admire success when both teams play by the same rules on an even playing surface. What if one of the basketball teams was able to have extra players on the court or the height of one team’s basketball hoop was lower than the other team’s? Very few people would watch or teams participate because the winner and loser is essentially picked before the game even starts.

Iowa’s complex corporate tax system picks winners and losers too. To cover up the nation’s highest corporate income tax rate of 12%, Iowa uses tax incentives in the form of tax credits to attract and retain businesses.

An editorial in the Cedar Rapids Gazette calls for a review of Iowa’s tax credits and exemptions. Not every credit in their editorial is business related, but as they say, “Figuring out what works and what’s waste,” is a good idea.

Tax policy rewards and punishes. When something is taxed more, you get less of it and when something is taxed less, you get more. A few examples of tax incentives within Iowa’s corporate tax system in Fiscal Year 2017 are $56.8 million for the Research Activities Credit to encourage research activities and $37.6 million for the High Quality Jobs Program to encourage the creation of high-paying jobs.

It is good for Iowa to encourage corporate research, job creation, and many other economic goals. But, the process should be simplified and available to every business. Eliminate these and other tax credits, LOWER THE TAX RATE FOR ALL BUSINESSES, and create a pro-growth economic environment. Along with lowering tax rates, protections need to be in place to make it hard for tax rates to increase in the future.

With a simple, transparent, and predictable tax structure, Iowa will encourage economic opportunity for all businesses. We will also have far more winners.

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Let’s Make It Happen!

Now is the time to press on with the goal of creating reasonable limits on state taxes and spending to spur economic growth. This will not be easy. The big spenders in Des Moines are loud and powerful. Special interests do not want to see their funding or benefits reduced. Iowans for Tax Relief is one of the few organizations at the Capitol without their hand out asking for more taxpayer dollars.

Road Less Traveled

It is time to stick a fork in some roads and bridges. The Cedar Rapids Gazette recently had a pair of articles about Iowa’s roads and structurally deficient bridges.

Iowa’s 24,242 structurally deficient bridges are the most of any state and third highest in percent of total state bridges according to the American Road & Transportation Builders Association 2016 annual bridge report. Structurally deficient does not mean the bridge will collapse when a school bus or grain truck drives over. It can simply mean the bridge deck is not wide enough to meet current standards.

The 10 cent per gallon increase in the fuel tax increase that passed in 2015 added an estimated $213 million per year to the state road use tax fund. Based on the state’s funding formula of 47.5 percent for the primary road system, 24.5 percent for secondary county roads, 20 percent for city streets, and 8 percent for farm-to-market county roads, the smallest piece of the pie is left to fix structurally deficient bridges. Perhaps Iowa does need to maintain fewer bridges and miles of roads.

In July, 2015, then Iowa Department of Transportation director Paul Trombino said he expected the state’s overbuilt and unsustainable road network to “shrink,” according to Charles Marohn of Strong Towns. Trombino also said Iowans should figure out which roads “we really want to keep” and let the others “deteriorate and go away.”

As with every other part of state government, we need a smaller and smarter transportation system. It either needs to become smaller by having fewer roads and bridges or become smarter by changing the formula to properly fund what we already have.

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We Are Paying Too Much!

A friend you haven’t seen in a long time invites you to dinner at a nice restaurant. You are excited to see them and accept. As you are driving there you tell yourself you will only order soup and a salad because you have stuck to your diet and have already lost 10 pounds. After looking at the menu, you notice every item includes an appetizer, salad, large entree, desert, and drink. The waiter says you are required to get and pay for everything. Sounds ridiculous doesn’t it? So is the bidding process for state government construction projects

Over 80 percent of Iowa contractors and their employees have chosen not to form or join a union. Even though that is a vast majority, this decision puts them at a tremendous disadvantage when bidding government projects under current Iowa law. Government mandated project labor agreements (PLA) require all contractors to give union officials complete control over bargaining, exclusively use union hiring halls, and force workers to pay union dues.

Jeremy Price, owner of Price Industrial Electric said in a Cedar Rapids Gazette guest column, “In my opinion, the worst component of a PLA is the requirement for a contractor to hire its workforce through a labor union. If I were to bid on such a project, the fact that I would not be able to put my own employees to work is wrong. My employees live here, pay taxes here, and are active in our community. They should not be kept from working on public projects simply because they have voluntarily made the choice not to belong to a union.”

Ending project labor agreements will protect taxpayers and non-union construction workers. This will give a vast majority of contractors a fair playing field when bidding on government projects. It is hard to stay on a diet when you have paid for a table full of food. It is just as hard to reduce the size of government when we exclude a vast majority of contractors from submitting a competitive project bid.

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Support Pro-Taxpayer Legislators!

Last November, your voice was clearly heard when you voted. Now, your legislators need your support again. Pro-taxpayer legislators are being attacked for defending Iowa’s budget.

Attend your forum and let them know you appreciate their efforts to make state government smaller and smarter.

In The Funnel

The Iowa legislature meets every year, however the session is to be for 110 days with expenses paid for every legislator. After the 110 days legislators receive no daily payment for their expenses.

Hundreds of bills are introduced the first weeks of session and acting upon each one in just 110 days would be impossible. Bills have specific dates, called “funnel” dates, on which action must be taken by a committee in order to keep the bill alive..

This year, bills need to have successfully passed out of their assigned committee in the House or Senate by today, March 3 in order to survive the first funnel. A second funnel date where bills have to pass out of the opposite chamber’s committee is March 31.

Exempted from funnel deadlines are bills handled by the Appropriations and the Ways and Means committees. Therefore tax and spending bills have taken a back seat to other issues for the time being. Issues receiving the most attention this week have dealt with professional licensure, pro-life issues, gun rights, and workers compensation insurance.

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Iowa Needs Climate Change!

The theme of this year’s session seems to based on a comment by Rep. Walt Rogers saying Iowa’s state government needs to be “Smaller and Smarter”. When government reduces regulations, spending, and taxes, an environment is created that encourages growth.

States like North Carolina, Texas, and Wisconsin that have follow limited-government policies are leading the way in terms of economic growth according to John Hendrickson of the Public Interest Institute.

Iowa has room for improvement. The Tax Foundation’s State Business Tax Climate Index ranks Iowa’s tax climate 40th out of 50 states (1 is best. 50 is worst). Their index shows how well each state structures their tax systems.

Taxes affect the decisions businesses make regarding creating new jobs and retaining current jobs. They affect where business build or re-locate and they reduce profits.

State and local governments rely heavily on tax credits and other fiscal incentives to attract or retain businesses. Instead of picking winners and losers by sporadically lowering the tax burden on select businesses, Iowa needs to create a smaller, smarter tax climate by lowering rates for all and simplifying the tax code. Stop trying to cover up unattractive state taxes.

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We Need Your Help!

Big spenders in Des Moines are loud and powerful. Special interests do not want to see their funding or benefits reduced. Iowans for Tax Relief is one of the few organizations at the Capitol without their hand out asking for more taxpayer dollars.

Convention of the States

A resolution calling for a convention of the states was approved by the Iowa Senate State Government Committee with a 12-3 vote. If Senate Study Bill 1110 is passed by the full Iowa Senate and later the Iowa House, Iowa will become the ninth state to call for a convention. Article V of the United States Constitution requires 34 states pass resolutions for a convention to occur.

COSAction.com, a supporter of the resolution, says states have been stripped of their decision-making authority. Consequently, debt is out of control and regulations crush free enterprise. They want a convention for the purpose of limiting the power and jurisdiction of the federal government. The approach is similar to when the Bill of Rights was adopted by seeking a package of amendments to rein in abuses of power by all branches of the federal government.

A policy study written by Iowans for Tax Relief founder and longtime chairman, the late David Stanley, entitled How to Restore Federal Fiscal Sanity: The State Legislatures Hold the Key, answers many questions about a state convention. In the study, Stanley says, “America is in a desperate race between national bankruptcy and the rising tide of citizens’ demand for the Balanced Budget Amendment.”

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Legislative Forums

You might not have attended a forum yet this year, but many who are opposed to pro-taxpayer legislators have. Last November, your voice was clearly heard when you voted. Now, your legislators need your support again.

Attend your forum and let them know you appreciate their efforts to make state government smaller and smarter.

Collective Bargaining Reform… The Week After

Two people can look at a problem and have completely different answers. Why? Perspective.

Iowa’s public sector workers are uncertain how the collective bargaining reform bill signed by Governor Branstad last Friday will change their lives. Many are worried jobs will be eliminated or how household budgets will be impacted. We have heard heart-wrenching stories from DHS workers, frightening events at our correctional facilities, and teachers going the extra mile to care for our kids. However, at the same time, many say they haven’t had raises, work more hours than they should, or have co-workers who take advantage of the system. Systematic change was needed for all. Click here to read last week’s Watchdog on what the reform will and will not do.

Tensions are still high and emotions are raw at the Capitol. Anti-reform legislators are blaming “special interests” and “dark money” for the reform. In reality, pro-taxpayer candidates winning elections last fall led to the legislature enacting reform with the intention of making Iowa government smaller and smarter.

Legislators have faced large crowds at local forums and have been asked to defend their support of collective bargaining reform. They have given solid, fact based answers in face to face conversations, emails, newsletters, and submitted articles.

“Iowa’s collective bargaining law has hurt our schools. Since passage in the early 1970’s, this law’s lack of teeth regarding arbitration has forced school districts to accept annual collective bargaining settlements well above what the districts received in revenue. Whether the state increased K-12 funding annually by 1%, 2%, 4% or even 6% didn’t matter, as the structure of Iowa’s law ensured that settlement amounts were greater than the districts took in. Given that 80-85% of a school district’s expenses are in that collective bargaining agreement, this was simply unsustainable… No organization, whether an Iowa family, a non-profit, a private company or a school district can survive by perennially increasing expenses by 1%-2.25% beyond revenue.”

Many opponents to the reform have incorrectly made the claim bargaining units can only discuss wages. Rep. Gary Carlson included a table of bargaining topics in his weekly email comparing the old and new classifications. Some topics that were mandatory are now prohibited, but many are considered permissive, and can still be discussed with management. Also, the language “Other matters mutually agreed upon” is still included. The new law will truly give city, county, school districts, and state government the flexibility to protect budgets and fairly compensate their hard working employees.

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Let’s keep the ball rolling!

Now is the time to press on with the goal of creating reasonable limits on state taxes and spending to spur economic growth. This will not be easy. The big spenders in Des Moines are loud and powerful. Special interests do not want to see their funding or benefits reduced. Iowans for Tax Relief is one of the few organizations at the Capitol without their hand out asking for more taxpayer dollars.

Please invest in our work NOW to ensure future victories for Iowa taxpayers!

No Changes to IPERS This Year

Rep. Ken Rizer, responded on Facebook and Twitter, “Total baloney & fear-mongering! We will NOT do IPERS reform this session. Any such reform has to go through the State Government Committee, of which I’m Chairman. No IPERS reform this year, and you can take that to the bank.”

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Fiscal Year 2018 Budget

According to the Legislative Services Agency (LSA), the FY 2018 revenue estimate will be $7.5563 billion. Iowa Code says the legislature can spend up to 99% ($7.4807 billion) of the estimate. That limit will be reduced by $25.2 million because of certain funds used in the FY 2017 budget making the maximum FY 2018 budget $7.4555 billion.

Iowa does not have a revenue problem, Iowa has a SPENDING PROBLEM.

As we learned the hard way a few weeks ago, spending right up to the limit is not wise and can lead to painful reductions if the revenue estimate is incorrect. State government’s goal should not be to spend all of the anticipated, but not yet received, revenue but rather leave a cushion. Prudent fiscal planning allows our elected officials to make the right fiscal choices for you and all Iowans if the revenue estimate changes.

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Support Pro-Taxpayer Legislators!

Last November, your voice was clearly heard when you voted. Now, your legislators need your support again. Pro-taxpayer legislators are being attacked for defending Iowa’s budget.

Attend your forum and let them know you appreciate their efforts to make state government smaller and smarter.

]]>http://www.taxrelief.org/collective-bargaining-reform-the-week-after/feed/0Legislature Approves Collective Bargaining Reformhttp://www.taxrelief.org/legislature-approves-collective-bargaining-reform/
http://www.taxrelief.org/legislature-approves-collective-bargaining-reform/#respondFri, 17 Feb 2017 23:34:06 +0000http://www.taxrelief.org/?p=390Continue reading "Legislature Approves Collective Bargaining Reform"]]>“This is good for Iowa, no matter what the union tries to tell you. Our local officials will have the ability to make more decisions that benefit their schools, cities, counties, AEA’s, community colleges, and the state itself.”– Sen. Jason Schultz

Collective Bargaining Reform Approved

This week collective bargaining reform was approved by the Iowa House and Senate. Governor Branstad is expected to sign the bill as soon as possible. With this reform, a system is now in place that’s able to provide cost savings without having to cut jobs or services for school districts and city, county, or state government.

An editorial by the Quad City Times stated, “The taxpayer does stand to gain from the overhaul. Health care costs annually spike, particularly at local government and school districts. And, year after year, union power insures it’s the taxpayer that picks up most of the tab. A single, statewide health care cohort equates to better rates and a better deal for taxpayers.”

The collective bargaining reform as passed will:

End the practice of state government payroll systems collecting union dues. Iowa taxpayers had been footing the bill for collecting union membership dues. Union dues are used to influence legislative activity.

Require bargaining units to hold re-certifications elections for all employees in the calendar year prior to negotiations. Most government unions in Iowa have not had a re-certification vote in over 40 years. That means almost all employees have not had the opportunity to choose a voice to negotiate for them.

Prohibit an arbitrator from considering previous bargaining agreements and the consideration of the government’s ability to raise taxes in order to pay for employee benefits. Previously, arbitrators could consider the power of the state “to levy taxes and appropriate funds for the conduct of its operations.” An arbitrator’s award cannot exceed the lesser of 3% annually or the consumer price index percentage.

Contrary to what anti-reform legislators said on the floor during debate in the House and Senate, this bill will NOT:

Change an employee’s right to discuss or negotiate on their own accord with their employer about any topic.

Senator Jason Schultz said in a Facebook post, “This is not a budget cutting bill. The hope is to save tax dollars and get better services through better management.”

For decades, Iowa’s collective bargaining law has put taxpayers at a disadvantage. The changes to Chapter 20 will bring a balance back to the system. This will be a better deal for taxpayers and an opportunity for our hard working public employees to be rewarded.

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“Why do we need this bill? Because we have listened to those locally elected officials and others and we have heard how the process has tied their hands.”
– Rep. Steven Holt

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Attend and Get Active!

Last November, your voice was clearly heard when you voted. Now, your legislators need your support again. Pro-taxpayer legislators are being attacked for defending Iowa’s budget.

Attend your forum and let them know you appreciate their efforts to make state government smaller and smarter.

This week, collective bargaining reform bills moved out of the House and Senate Labor committees. After a public hearing this coming Monday, February 13, both chambers will most likely vote on the bills next week.

Iowa’s current collective bargaining laws (Chapter 20 of the Iowa Code) have not been updated in over 40 years. Chapter 20 allows state government employee unions to negotiate on contract topics such as employee wages, promotions based on seniority, cost of health insurance, amount of vacation time, and how workers are evaluated and terminated. This has not been beneficial to Iowa taxpayers. The reform bills would limit collective bargaining to base wages. All other topics would be off the table.

The reform would also:

Prohibit an arbitrator from considering previous bargaining agreements and the consideration of the government’s ability to raise taxes in order to pay for employee benefits. Under Chapter 20, arbitrators can consider the power of the state “to levy taxes and appropriate funds for the conduct of its operations.” In 1991, arbitrators justified giving state employees a 9% raise because of the state’s ability to raise taxes. The next year, Iowa increased the state sales tax from 4% to 5%, a 25% increase.

End the practice of withholding union dues from state employee paychecks. Currently, Iowa taxpayers are footing the bill for collecting union membership dues. Union dues are then used to influence legislative activity. This should not be a taxpayer responsibility!

Require bargaining units to be re-certified by employees in the calendar year prior to negotiations. Most state government unions have not had a re-certification vote in over 40 years. That means almost all employees have not had the opportunity to vote on their representation.

Restore leadership decisions to city, county, school district, and state elected officials by allowing them to reward high performing employees and give them flexibility to deal with those not meeting acceptable performance standards.

Iowans for Tax Relief president Chris Ingstad was one of the speakers who spoke in support of reform at the House and Senate Labor sub-committee meetings. He said, “The size of state government is growing faster than household incomes of Iowans, which means the taxpayer is shouldering a relatively heavier burden. Reform is needed because Iowa should have in place a system that’s able to provide cost savings without having to cut jobs or cut services.”

In 2011, Wisconsin enacted similar collective bargaining changes. The impact of Wisconsin’s reform is significant and has allowed state and local officials to use taxpayer dollars more efficiently. In order for Iowa to avoid deficits and achieve any type of tax reductions, the legislature must address state spending. Collective bargaining reform is a great first step in that direction.

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Tuesday, Simon Conway received a call on his WHO 1040-AM radio show from a state government employee. The caller said, “I went for 8 years without a raise. 12 hour days. Not one penny of overtime. That went on for over 10 years.”

Sen. Mark Chelgren responded to the caller, “I would say that is a perfect example of the existing code, Chapter 20, not working. The reason to modify and bring up to date Chapter 20 reform is we want to make sure those individuals working hard and performing well are rewarded.”

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Attend and Get Active!

Pro-taxpayer legislators have told us they would appreciate your attendance to provide some balance.These are not ITR sponsored forums.

Iowans for Tax Relief Supports Collective Bargaining Reform

Iowa’s collective bargaining laws have not changed since the 1970s. They allow state government employee unions to negotiate on topics such as employees wages, promotions based on seniority, cost of health insurance, amount of vacation time, and how workers are evaluated and terminated.

Iowa’s ever increasing spending has required tax receipts to grow from $6.3 billion in 2009 to $8.3 billion currently. In order to achieve any tax reductions and avoid deficits, the Iowa legislature must address spending. This is a big step in that direction.

Iowans made their voices heard in the election last November. They want meaningful reform. It’s time to bring collective bargaining into the modern era and not rely on the outdated system currently in place.

The collective bargaining reform introduced today will bring balance to the negotiation process. It will also:

End the use of taxpayer dollars being used to influence politicians.

Reduce the pay and benefit gap between state government employee and private sector employees. Extravagant wages and benefits are an unfair burden on taxpayers.

NOT hurt teachers. Teachers will have more rights and more say in their compensation. It will also make it easier to reward good teachers.

Our city, county, school districts, and state government need more control of their budgets. These changes are long overdue and Iowans for Tax Relief will encourage our membership to have their legislators support this bill.

Iowans for Tax Relief works to limit total government spending and total taxes for the benefit of all Iowa taxpayers. ITR was established in 1978 and is one of the largest taxpayer protection organizations in the country.

“Government is often littered with good ideas that may be will past their expiration date.”
– Rep. Zach Nunn http://buff.ly/2jvCJ6J

Collective Bargaining Reform

Iowa’s collective bargaining laws allow state government employee unions to negotiate on contract topics such as employee wages, promotions based on seniority, cost of health insurance, amount of vacation time, and how workers are evaluated and terminated.

Iowa teachers will NOT be hurt by collective bargaining reform.

Teachers have a complex set of skills. They should be rewarded for achievement. Compensation plans would be designed to reward staff involvement and planning. It will be easier to reward good employees. Teachers will have more rights and more say in their compensation with collective bargaining reform.

In 2011, Wisconsin limited collective bargaining to teacher’s base wages and allowed school districts to reward teachers based on more than years employed and education level. The impact in some schools is significant. For instance, The Weekly Standard found one school district increased starting teacher salaries 20% and receives “a couple hundred applications for every opening.” Studies also indicate student’s academic achievement have improved when the best teachers are rewarded.

Currently, taxpayer dollars are used to influence politicians.

When an Iowa state employee who is a union member receives their paycheck, the state payroll system, paid for by taxpayers, collects dues and political action dollars for government employee unions. These dollars are then used to influence political campaigns and buy favor with politicians.

In the 12 months prior to the 2016 election, Iowa’s largest public employee union, AFSCME, contributed over $620,000 to Democrat candidates and groups. The state should not be forced to use taxpayer funded resources to subsidize partisan political activity.

Let’s be fair! Iowa government employees earn far more and have better benefits than employees working in the private sector.

According to the U.S. Department of Labor, the average Iowa state employee receives a $65,000 annual salary compared to $43,000 received by a private sector employee.

Additionally many state employees only contributed $20 per month for their health insurance premium!

Employee contribution for health insurance premiums:

2015 national average for all
government and private sector employees:

Single: 20%
Family: 31%

Many state of Iowa government employees:

Single: 1%
Family: 2%

Collective bargaining reform would make it easier for cities, counties, school districts, and state government to reward good employees, remove poor performing employees, and allow more control over their budgets.

Contact your legislators and encourage them to support collective bargaining reform in Iowa! Click here to find your legislator.

Receive updates throughout the week on Facebook – @IowansforTaxRelief and Twitter – @ITRWatchdog

____________________

“If there’s an income tax reform plan, I will be the first one at the table giving up incentives.”
– Debi Durham, Iowa Economic Development Director, speaking at Economic Growth Committee meeting.

ITR agrees! Better structure, lower rates, fewer credits.

____________________

Attend and Get Active!

Pro-taxpayer legislators have told us they would appreciate your attendance at these forums to provide some balance.These are not ITR sponsored forums.

Thumbs up to Senator Julian Garrett for saying on the Senate floor, “Every year revenue has gone up. Every year, spending has gone up more. That’s the problem.”

Wednesday, Senator Pam Jochum said,
“Tax cuts are spending.”
Sen. Jochum, letting people keep more of their own money is not spending!

Coupling Unhitched & Taxes Going Up!

The long-standing taxpayer protection of coupling has fallen victim to past overspending by Iowa’s legislature. Iowa’s income tax code will no longer match or “couple” with many federal deductions when filing state income taxes for the 2016 tax year.

Iowa overspent because last year’s legislature budgeted right up to the maximum of estimated revenue. Tax receipts will grow by over $300 million this year, but that amount is less than initially expected. This week the House, Senate, and Governor tentatively agreed on removing $117.8 million from the remaining Fiscal Year 2017 (ending June 30, 2017) budget. Removing many previously reliable income tax deductions for Iowans was unfortunately a major piece of the budget solution.

Coupling is not just a tax protection; by not coupling Iowa has just made tax filing more complicated, too. Joe Kristan, a CPA at Roth & Company, PC, Des Moines, Iowa, said in a recent post online, “We didn’t expect Sec. 179 coupling, but wholesale non-coupling is a new and unwelcome twist. So this tax season will be awful in Iowa”.

Kristan said the affected items will include:

Exclusion for IRA distributions to charity

Exclusion of gain from qualified small business stock

Basis adjustment for S corporation charitable contributions

Built-in gain tax five-year recognition period

$250 above-the-line educator expense deduction

Exclusion of home mortgage debt forgiveness

Qualified tuition deduction

Optional sales tax deduction

Conservation easement deductions

Deduction for food inventory contributions

Some legislators have indicated they would like to make coupling permanent in next year’s legislative session beginning with the 2017 tax year. If not, this is SIMPLY A TAX INCREASE! We need your help to keep legislators accountable and not let this tax increase continue in the future.

Change Starts With YOU!

Motivational speaker Tom Ziglar said, “Change starts with you, but it doesn’t start until you do.”

Pro-taxpayer voters stood up and spoke in November. The message of wanting change, reform, and reduced spending won at the ballot box. We started, but are nowhere near the finish line.

As we have seen with recent gatherings and marches, supporters of more spending and higher taxes show up demanding more resources be devoted to their pet projects. In turn, advocates for reduced spending and lower taxes need to constantly reinforce the smaller, smarter government message by attending local forums to support pro-taxpayer legislators. Remind them to follow through with changes you so clearly desired when you cast your votes in November.

If you are not able to attend a forum, call or email your legislator. Visit the legislator lookup page at www.taxrelief.org for your legislator’s contact information.

Attend and Get Active!

Speak up and let these pro-taxpayer legislators know you want to help them protect Iowa’s budget.
These are not ITR sponsored forums.

Calm Before The Storm

The traditional saying of “the calm before the storm” is being played out at the Capitol this week. It seems there will be a period of high activity occurring shortly. However, all of the major issues legislators want to work on seem to be on hold until the deappropriation process, or spending reduction, for the Fiscal Year 2017 budget is completed.

Last year’s legislature budgeted to spend right up to the maximum of estimated revenue for 2017. Tax receipts are now estimated to grow “only” $304 million over FY 2016, instead of the $400 million in growth that was initially estimated. This means there is an unexpected gap in the budget of slightly more than $100 million. New legislators have the unenviable task of finding $100 million in spending cuts to be spread out over the remaining 5 months of the current fiscal year which ends June 30. As we mentioned in the January 6, 2017 ITR Watchdog, Iowa isn’t receiving less money this fiscal year, it is spending too much!

Legislators have questioned some of the governor’s proposed cuts. In an interview with O. Kay Henderson of Radio Iowa, Speaker of the House Linda Upmeyer said, ““We’ve got a couple of different ideas than the governor, so we’ll have those conversations and by early in the week we’ll be able to hopefully file a bill and get it moving through committee and get it done.”

Senate Majority Leader Bill Dix told Rod Boshart “We’re looking at all the proposals that we have and no decisions have been made. We’re going to do everything we can to find that agreement as quickly as we can,” he added. “The longer we wait, the more difficult it gets to make those reductions in the time frame necessary.”

The chart, above, shows the Fiscal Year 2017 budgeted appropriations and expenditures divided into six categories and the percentage of the each. Below are the total dollar amount for each category.

State Aid to Schools $3.175 million
Medicaid, Mental Health & HHS $1.318 million
Higher Ed $806 million
Property Tax Credits $482 million
Other Dept. of Health and Human Services $432 million
Corrections $385 million
Rest of State Gov. $750 million

Spending should have been addressed last year, but removing a total of $100 million from this budget should be able to be accomplished. Once this SPENDING PROBLEM is fixed, the storm of activity will arrive with legislators pushing their agendas.

We will keep you updated of any proposals made by the House or Senate. Keep an eye on our new Iowa Tax News page, Follow us on Facebook – @IowansforTaxRelief, or Twitter – @ITRWatchdog to stay updated daily.

A new analysis by the nonpartisan Iowa Legislative Services Agency examined health insurance costs for certain executive branch agencies, judicial branch offices and legislative branch offices between 2005 and 2015. It found that health insurance costs for those employees soared from $143.2 million to $235.7 million, an increase of $92.5 million, or 64.6 percent.

In Iowa, state government’s contribution in 2015 for state employees was estimated at 99.4 percent for single coverage and 97.6 percent for family coverage.

Branstad said he thinks a streamlined master contract would provide savings for the state’s taxpayers and also help smaller public employers, such as school districts, better withstand health care costs.

House Speaker Linda Upmeyer, R-Clear Lake, said House Republicans won’t start filing bills in earnest until they’ve taken care of the 2017 Budget.

Lower-than-expected revenue returns are forcing legislators to make about $110 million in program cuts in the current budget year. Gov. Terry Branstad made his proposals last week, but lawmakers must finalize the spending plan.

“I really don’t want people distracted by a lot of other things until we get that done,” Upmeyer said.”… Everybody’s working on things, so I anticipate we’ll have a lot more bills filed next week.

]]>http://www.taxrelief.org/itr-watchdog-weekly-newsletter-2/feed/0Let’s Get Smaller and Smarter!http://www.taxrelief.org/itr-watchdog-weekly-newsletter/
http://www.taxrelief.org/itr-watchdog-weekly-newsletter/#respondFri, 13 Jan 2017 23:04:19 +0000http://www.taxrelief.org/?p=244Continue reading "Let’s Get Smaller and Smarter!"]]>The gavel dropped opening the 2017 legislative session on Monday, with renewed optimism for government efficiency and less of a burden on taxpayers. Speaker of the HouseLinda Upmeyer told Iowa Public Radioshe would look for an opportunity to “…put more tax dollars in the taxpayers’ pockets. We should at a minimum be able to look at simplifying our tax code,” referencing an income tax system that hasn’t seen a reduction in its highest rate since 1998.

Representative Walt Rogers was excited about his catchphrase being used by many of his colleagues, saying, “Everyone is talking smaller, smarter government at the GOP breakfast this morning, yes!”

Governor Branstad echoed that smaller, smarter sentiment in his condition of the state address Tuesday and said, “We have also made the tough decisions to ensure government lives within its means like Iowa families do.”

While many elected officials have expressed a desire to shrink government and return money to the taxpayer,information from the Iowa LSAindicates the $6.921 billion in tax revenue received by the state’s general fund in fiscal year 2016 was the largest amount ever with 51.1% of the total net receipts coming from personal income taxes. As the chart below shows, general fund revenue has SKYROCKETED since the mid-1990s.

With Iowa’s political leaders voicing their desire to create a smaller, smarter government, and return dollars to the taxpayers, the new legislative sessionISthe time to make significant progress towards those goals. The Iowa Senate led the charge by filing Senate Joint Resolution 1 (SJR 1), a proposed amendment to the state’s Constitution that would limit spending to 99% of available tax revenue. While the 99% spending limit already exists in statute, this constitutional amendment would be an even stronger restraint. Havingmeaningful reduction in spending,opportunities for substantial tax cuts can occur. Iowans for Tax Reliefwill be closely following the progress of this and other important pro-taxpayer relief this year and our registered lobbyists will be working for you thetaxpayerat the state Capitol, all session long.

IOWA TAX NEWS

This week’s links of interest about tax issues in Iowa.Follow us on Facebook – @IowansforTaxRelief or Twitter – @ITRWatchdog to stay updated daily.

Just like we said in last week’s Watchdog:http://bit.ly/2inPy2D
“We’ve been warning as a caucus that the level of spending was accumulating to a point where this kind of crisis was going to occur, and we’re prepared to fix it,” Dix said. “We’re going to fix it.
QC Times – http://bit.ly/2jfgLJ9

Limit future tax and spending increases with constitutional amendments.
Iowa’s GOP lawmakers see tax policy changes a 2017 must-do. It’s been 20 years since last income tax cut – but can state afford one now?
Cedar Rapids Gazette – bit.ly/2iVuqoc

]]>http://www.taxrelief.org/itr-watchdog-weekly-newsletter/feed/0Iowa’s Tax Receipts Are Still Rising, Even with Calls for Budget Cutshttp://www.taxrelief.org/the-watchdog-weekly-update/
http://www.taxrelief.org/the-watchdog-weekly-update/#respondFri, 06 Jan 2017 17:58:16 +0000http://www.taxrelief.org.php56-26.ord1-1.websitetestlink.com/?p=31Continue reading "Iowa’s Tax Receipts Are Still Rising, Even with Calls for Budget Cuts"]]>In This Issue

Iowa’s Tax Receipts Are Still Rising, Even with Calls for Budget Cuts

This Week’s Iowa Tax News

Iowa’s Tax Receipts Are Still Rising, Even with Calls for Budget Cuts

Following the December meeting of Iowa’s Revenue Estimating Conference (REC), news outlets have reported that the state budget for the current fiscal year will have to be cut by approximately $100 million. However, if you read those reports carefully, you can see government double-speak at work. Newspapers, such asThe Des Moines Register, reportedthat “A decline in projected state tax revenue will force $100 million in spending cuts for the current state fiscal year,” according to David Roederer, director of the Iowa Department of Management.

Scrutinizing the report a little closer, you learn thattax receiptsthemselveshaven’t declined, just the projected amount ofINCREASED revenue has declined. In other words, revenue is still going up, just not by as much as the estimators thought it would. The incoming legislature now has to deal with a problem created by the previous legislature. Prior spending commitments, nearly to the maximum of what previous legislators thought the state would receive, will likely force current Senators and Representatives to make reductions because the revenue estimate proved to be overly-optimistic.

This is a little like buying a new big-screen television with the surround-sound system for Christmas because you believe your boss is going to give you a hefty raise the following year or grandma is going to send you an even larger check as your gift this year. If the raise or the check turn out to be smaller than you thought, you find you have overspent your budget. Your “revenue” did go up, just not as much as you “projected” that it would, so you now find yourself in budget trouble.

At the December REC meeting, the members scaled back their projection for FY17, but they are still estimating that tax receipts will rise from FY16 to FY17. Instead of tax receipts rising by $416 million, or 5 percent, the REC now says tax receipts will increase by $304 million, or 4 percent, necessitating the budget cuts of $100 million.

Iowa isn’t receiving less money this fiscal year, it is spending too much! The chart below shows how much, in dollars, state tax receipts grew or declined, and the percent change in each year.

The goal for a prudent state government fiscal plan should not be to spend all of the anticipated (but not received) additional revenue, but rather leave a cushion, adding funds to the rainy day account or some other savings account if we do in fact end up with surplus revenue. Prudent fiscal planning allows our elected officials to make the right fiscal choices for you and all Iowans if the REC estimates change.

Iowa Tax News

This week’s links of interest about tax issues in Iowa. Follow us on Facebook – @IowansforTaxRelief or Twitter – @ITRWatchdog to stay updated daily.

]]>http://www.taxrelief.org/the-watchdog-weekly-update/feed/0New Leader for Iowans for Tax Reliefhttp://www.taxrelief.org/new-leader-for-iowans-for-tax-relief/
http://www.taxrelief.org/new-leader-for-iowans-for-tax-relief/#respondThu, 15 Dec 2016 18:01:30 +0000http://www.taxrelief.org.php56-26.ord1-1.websitetestlink.com/?p=36Continue reading "New Leader for Iowans for Tax Relief"]]>Iowans for Tax Relief (ITR), Iowa’s leading taxpayer advocacy organization, today announced the promotion of Chris Ingstad to President. Ingstad joined Iowans for Tax Relief in 2012. In 2015 he was promoted to Vice President and Policy Director, a role in which he has lobbied Iowa legislators and worked to educate and inform voters.

Before becoming part of the Iowans for Tax Relief team, Ingstad served as Vice President of Pearl Management Company, an investment management firm founded by ITR’s late founder and longtime Chairman, David Stanley. Prior to Pearl Management Company, he held various corporate finance roles for Allsteel Inc, an operating company of Muscatine-based HNI Corporation.

ITR Chairman Rob Solt said, “Chris worked closely with Dave Stanley, first at Pearl Management Company and later with ITR. Chris shares our founders’ values and vision that the growth of government spending and taxes should be limited for the benefit of all Iowans. He will continue to build ITR’s reputation as the taxpayers’ watchdog.”

Chris earned a Bachelor of Arts degree in Finance, as well as a Master of Business Administration degree, from Saint Ambrose University in Davenport, Iowa, and he graduated from Leadership Iowa as part of the 2014-2015 class.

Community involvement highlights include membership in the Bull Moose Club of Des Moines, serving as Vice President of the Muscatine Community YMCA, and a past member of the Boards of the ARC of the Quad Cities Area, Muscatine Community School District Foundation, and Muscatine Youth Basketball. Ingstad is also an active Rotarian.

Iowans for Tax Relief works to limit total government spending and total taxes for the benefit of all Iowa taxpayers. ITR was established in 1978 and is one of the largest taxpayer protection organizations in the country.

MUSCATINE, IA – Iowans for Tax Relief (ITR) announces the hiring of Dan Steele for the newly-created position of Communications Director. Since 2013, Steele has been President of O.P. Printing, Inc. where he developed marketing strategies for small businesses and electoral campaigns after previously being employed by ITR from 2001 to 2013. Steele had served in many roles at ITR, including Creative Director and Vice President of Operations.

Vice President and Policy Director Chris Ingstad said, “Dan will help ITR communicate news, action alerts, and legislative updates to our members. He’ll also lead our digital media platforms, including our website re-design and social media accounts. We are excited to add his experience as ITR increases our efforts to inform members, influence legislators, and identify the waste of taxpayer dollars through investigative reporting.”

Iowans for Tax Relief works to limit total government spending and total taxes for the benefit of all Iowa taxpayers. ITR was established 1978 and is one of the largest taxpayer protection organizations in the country.

]]>http://www.taxrelief.org/iowans-for-tax-relief-announces-the-hiring-of-dan-steele-as-communications-director/feed/0Iowans for Tax Relief PAC Sees Success on Election Nighthttp://www.taxrelief.org/iowans-for-tax-relief-pac-sees-success-on-election-night/
http://www.taxrelief.org/iowans-for-tax-relief-pac-sees-success-on-election-night/#respondThu, 10 Nov 2016 18:00:41 +0000http://www.taxrelief.org.php56-26.ord1-1.websitetestlink.com/?p=34Iowans for Tax Relief PAC Sees Success on Election Night
]]>http://www.taxrelief.org/iowans-for-tax-relief-pac-sees-success-on-election-night/feed/0A Brief Review of the Success of Tax Cuts – The Insiderhttp://www.taxrelief.org/insider_2007/
http://www.taxrelief.org/insider_2007/#respondTue, 06 Nov 2007 15:19:38 +0000http://www.taxrelief.org/?p=1026Continue reading "A Brief Review of the Success of Tax Cuts – The Insider"]]>IT IS FAIR TO SAY THAT as a nation we do not like taxes, but we accept them as a necessary burden to run our country based on the rule of law. The social contract requires some form of taxation, but as King George III learned, it is unwise to be irresponsible when it comes to tax policy.

The citizen response to taxation is often complex and confusing. Citizens do not like high taxes, yet they expect much from all levels of government and complain when deficits grow. How does government keep taxes low, keep revenues coming in, and yet keep the economy growing? The solution is to cut taxes and government spending, in addition to reviving the fiscal aspects of the Constitution.